The Law

Legal Action Okay for “Additional Rent” by Ron Davis Does acceptance of partial rent from a tenant absolve him of having to pay the full committed amount? That was a question a New York court had to answer when trying to settle a dispute between owners of a shopping center and one of their tenants. That shopping center is located in the Long Island town of Jericho, and the center’s owners purchased the facility in 2009, then decided to undertake its upgrading. The tenant was leasing space there at the time for the operation of a business known as 7th Heaven USA Inc. So the new owners agreed to allow the tenant to pay a meager amount of base rent while upgrading construction of the premises continued. But the agreement also required the tenant to pay “additional rent” once construction was completed. Eventually, the center’s owners determined that the tenant owed base rent of $1,205.10, but $79,396.72 in additional rent. That additional rent, the owners explained, results from improvements to the parking lot, sidewalks, curb work, electrical systems, roofing, plus unpaid rent, taxes, “other work” and common area maintenance. The tenant argued that the work on those improvements was completed in December 2010. For that reason, the tenant added, the center’s owners had no right to request any sort of payments for work after the completion date. Moreover, the tenant concluded, by accepting rental payments, the center’s owners had waived their right to collect any additional amounts in rental-related charges. Not so, replied the center’s owners, acceptance of those trivial rental amounts does not show any clear intent to waive their rights to the full amounts of rent that the tenant owes them. A New York court agreed with the center’s owners, explaining, “The activities to collect the additional rent demonstrate no intent to abandon any rights by accepting the basic rent to which it is entitled under the terms of the lease. To hold otherwise would violate the principal of law…that waiver may not be inferred to ‘frustrate the reasonable expectations of the parties embodied in a lease.’ In addition…, the lease contains a ‘no waiver clause,’ which states that no waiver of any provision of this lease shall be effective unless in writing, signed by the waiving party.” Concluded the judge, “The facts and circumstances…constitute a proper basis for [the center’s owners] to commence legal action for the additional rent. There is no basis to find that [the center’s owners] waived that right…. To hold otherwise would frustrate the reasonable expectations of the parties embodied in their lease. The motion to dismiss is denied in its entirety.” (Ambrogio & Caterina Giannone Family Ltd. Partnership v. 7th Heaven USA Inc., Slip Copy, 2012 WL 2476682 [N.Y. Dist.Ct. ]. Decision: July 2012 Published: August 2012