What You Need to Know About Commercial Real Estate Lease Agreements: Part III

This blog post is part III in a series of posts providing an overview of important considerations for commercial lease agreements.  Regardless of whether a landlord or tenant, there are numerous issues that all parties should consider prior to entering into a commercial lease agreement.  Part I addressed mandatory and suggested commercial lease agreement terms and the legal duties and obligations of the parties involved.  Part II discussed the enforceability of certain lease agreements, tort liability for both landlords and tenants, and the use of personal guarantees.  Part III will focus on a tenant’s remedies, claims and defenses when a landlord breaches a commercial lease agreement.

A tenant may bring action for general damages against a landlord who has breached the lease contract or a covenant within the contract.  General damages are the difference, if any, between the market value of the remainder of the term and the rent value of the remainder of the term.  Punitive damages may also be available where there has been a tortious breach of contract by the landlord involving an independent tort separate from the breach of contract.  Charter Air Ctr., Inc. v. Miller, 348 So.2d 614 (Fla. 2d DCA 1977).

If the landlord wrongfully takes possession of the leased premises without legal process, the tenant may bring an action for unlawful entry and detainer.  Fla. Stat. § 82.01.  Moreover, a landlord has “no right to attack the lessee’s business by interfering with suppliers, customers or making disparaging remarks to third persons about the credit worthiness of tenant’s business.”  Domres v. Perrigan, 760 So.2d 1028 (Fla. 5^th DCA 2000).  When a landlord’s wrongful act deprives a tenant of possession or disturbs a tenant’s beneficial enjoyment of the premises to such an extent that causes the tenant to abandon the premises, then the tenant may have a cause of action against the landlord for actual or constructive eviction.  McCready v. Booth, 398 So.2d 1000 (Fla. 5^th DCA 1981).  Usually, a tenant must first abandon the premises in order to sue for wrongful eviction.  Id.  However, a court has found wrongful eviction to exist where a landlord attempted to coerce the tenant into signing a lease with much higher rent, threatened to lock the tenant out, and refused to accept a late rent payment after an agreement to do so.  Caso v. Stanley Nelson, Inc., 419 So.2d 668 (Fla. 4^th DCA 1982).

A tenant who suffers wrongful eviction may claim general damages and may also be entitled to lost profits and relocation expenses.  Ardell v. Milner, 166 So.2d 714 (Fla. 3d DCA 1964).  If a landlord’s behavior is found malicious in nature, or constitutes fraud, gross negligence, or oppression, punitive damages may also be claimed as well.  Young v. Cobbs, 83 So.2d 417 (Fla. 1955).  When a tenant is evicted wrongfully, the landlord must return the tenant’s security deposit with interest.  Id.  Stay tuned for part IV in this series, which will discuss the landlord’s remedies, claims and defenses when a tenant breaches the commercial lease agreement.