Thursday, June 27, 2013

COMMERCIAL LEASE: Time to Review and Update

Are you a commercial landlord?  Have you been using the same lease for your tenants for years?  Are you fully protected if your tenant defaults?  The Massachusetts Supreme Judicial Court recently held in the matter of 275 Washington Street Corp. v. Hudson International, LLC, that if the remedy is not in the lease, the landlord cannot pursue it.  In 275 Washington Street, the tenant broke a 12 year lease after only two years.  The landlord quickly found a replacement tenant, at a lower rent, and sued the former tenant for damages.  The SJC held that the landlord must wait the full term of the lease to determine its damages because the only remedy in the lease was an indemnification clause. 

The SJC essentially told landlords that in order to collect damages from a former tenant, remedies for default must be clearly and explicitly stated.  The landlord must carefully draft its lease to include specific remedies, such as a damages acceleration clause, to ensure recovery if the tenant defaults or breaches the lease before the term expires. 

Does your lease contain only an indemnification clause?  Has your lease been updated to ensure you are protected and can collect damages from your former tenant immediately?  Phillips Silver has helped many commercial landlords throughout Massachusetts draft leases, negotiate lease terms and evict tenants and is ready to discuss your commercial leases and tenants with you.

The information you obtain on this blog is not, nor is it intended to be, legal advice. You should consult a lawyer for advice regarding your individual situation. We invite you to contact Phillips Silver and welcome your calls, letters and electronic mail.   Please note, contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.