Commercial leases are a vital part of doing business in Florida, but sometimes the signing parties forget that every word of these legally-binding documents matters. Even seemingly innocuous phrases can end up being central to a party’s obligation. That is why it is crucial that you carefully review all contract terms and engage in any necessary negotiations before signing a lease with another party. Unfortunately, commercial leases often contain legalese and boilerplate provisions that one or both party may not comprehend or will overlook before effectuating the agreement. However, as one landlord recently discovered, it’s critical to pay attention to your commercial lease.
In 2018, Florida’s Fifth District Court of Appeal considered a commercial landlord-tenant disagreement in Nabbie v. Orlando Outlet Owner, LLC. In this case, the tenant defaulted under the lease, and the landlord sued the tenant’s guarantor. The guarantor argued that the landlord could not recover payment because the landlord never made a demand on the guarantor prior to filing suit as expressly required under the lease. The landlord argued that a paragraph in the lease excused the requirement that a demand be made on the guarantor. The trial court agreed with the landlord, and the guarantor lost the case.
On appeal, the reviewing court examined the paragraph at issue as well as contradictory language in the agreement which stated that after the tenant’s default, the guarantor “shall on demand of Landlord, fully and promptly pay all rental and other sums, costs, and charges to be paid by Tenant…” The appellate court interpreted the contradictory paragraph to mean the landlord did not have to initially demand that other parties pay before making an official demand from the guarantor in this case. The court, therefore, rejected the landlord’s argument that the language in the lease excused the landlord from complying with the demand requirement.
Every commercial lease is different, and this decision serves as a reminder that when drafting, negotiating, and signing an agreement, it is vital that you understand all provisions and agree with them. Otherwise, you could end up being bound by unfavorable terms and without protection or recourse if the other party breaches the agreement.
At Rabideau Klein, we have extensive experience handling commercial lease agreements. In the Palm Beach area. Guy Rabideau, Esq. and David E. Klein, Esq. are Florida Board-Certified Real Estate Attorneys with the experience you need for your South Florida luxury commercial transactions. We have the expertise and local knowledge you need to ensure that your interests are protected. Contact Rabideau Klein today to discuss your real estate legal needs.