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by Ron Davis
Late payment of rent has cost the tenant of a Washington state shopping center his business—and a sizable amount of money as well.
The shopping center, located in the Seattle area, leased space to the tenant for the operation of a food store and delicatessen. That lease, however, was very specific regarding late rental payments. One provision stated, for example, that the option to extend the lease beyond the initial five-year term would depend on the tenant’s “fully and timely” paying the rent and fulfilling other lease obligations.
During the initial term of the lease, the tenant spent more than $250,000 on equipment and fixtures. But during the course of the first five years, he was late paying the rent on two occasions. Plus, he failed to comply with insurance requirements of the lease for a short time.
So when the tenant eventually gave notice that he wanted to extend the lease for another five-year term, the shopping center’s owners rejected his offer. Instead, they offered him a one-year lease. The tenant refused to sign that lease, however, arguing that he had paid all rent due and had adequate insurance in force and so should have a five-year extension.
Since the tenant did not sign the one-year lease extension, the shopping center’s owners treated the relationship as a month-to-month arrangement. Later, they sold the shopping center, and when the new owner and the tenant couldn’t agree on the terms of a new lease, the new owner began eviction proceedings.
The dispute eventually ended up in a court battle between the two parties.
A Washington appellate court, in ruling in favor of the new shopping center owner, explained, “The lease agreement states that, in order to renew, the lessee must timely fulfill the terms of the lease…. In arguing that he performed as required under the lease, he makes a tortured analysis regarding the payment of rent that distinguishes between the words ‘timely’ and ‘promptly.’ We reject the analysis, and because this was a month-to-month tenancy, the landlord gave proper and sufficient notice for the tenant to terminate his tenancy.” (Hwy 9 Shopping Center, L.L.C. v. Punuel, Inc., 2004 WL 1199621 [Wash.App.Div. 1])
Decision: June 2004
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