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Who's in Default on the Lease?

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eyedoc

Junior Member
What is the name of your state?What is the name of your state? North Carolina


In April of 2004, I entered into a 5 year lease agreement with a landlord to take 1800 sqft. I had a consultant negotiate the lease for me, and an addendum was added that stated that the landlord was responsible for "buildout and all associated costs with the exception of carpet, paint, tile and cabinetry." My requested floor plan was also added as an addendum, and that page was initialed by the landlord. Less than two weeks after signing the lease, I found a better opportunity, and decided it would be in my best interest to terminate the lease and pursue the other opportunity.

I contacted the landlord and met with him face-to-face. I told him of my desire to terminate the lease, and explained my reasons. He was not happy about losing a tenant, but stated "I won't crucify you over this" and "if you want to leave, I won't make you stay." It was understood that there would be a penalty for letting me out of the lease, and I offered that the landlord keep monies already paid ($4,875) and I would also give him an extra $5,000 to free me from the lease. Not a bad deal considering he had incurred no costs of buildout yet and I had only had his space off the market for 12 days. He again said "I won't crucify you over this," but indicated that he had to discuss the situation with his business partners first. We left the meeting with a handshake.

I called the landlord a week later to see if he would accept my offer to terminate the lease, and his response was that he still hadn't talked to his business partners. After 2 months of phone calls, most of which were never returned, the landlord still neglected to give me a definite answer as to whether he would accept my offer. My occupancy of the location was to have begun on July 1, 2004.

On July 12, 2004, I recieved a letter from the landlord that served to notify me that I was in default of the lease for failure to occupy. He indicated that he was putting the space back on the market, and that I either needed to begin paying rent, or I could pay 1 year of rent + CAM and pay the realtor his commission. This came to approximately $45,000, in addition to monies already paid.

I do not believe that I am in default of this lease agreement for a couple reasons. First, it was the landlord's responsibility to prepare the space for my occupancy, which he has failed to do. The location still has no walls and a gravel floor. Not only does it not meet the floorplan agreed upon in the lease, but it also lacks the minimal "vanilla shell" that would have been required otherwise. Also, in it's current shape, the space doesn't even qualify for a certificate of occupancy in this county. In effect, it's not legal to rent. Second, the landlord never offered me keys, and never officially contacted me to put the property in my possession.

I understand why the landlord did not build out the location - he didn't expect me to occupy it. However, until he and I reached a mutually agreeable term to terminate the lease, he still had a responsibility to prepare the location. The fact that he avoided contact with me for 2 months is his problem, not mine. If he had expected me to pay significantly more than I had offered, I should have been made aware of that in a timely manner, and I could have exercised my right to occupy the space, and would have had to forego the other opportunity. As it stands, the landlord has taken that option from me.

At this point, the landlord has sued me for back rent (since lease commencement on August 1, 2004) and attorney's fees. He has sued me in conjunction with the real estate agent, who is seeking his full commission from me. Obviously, I don't feel obligated to pay either of them. I did initially ask to terminate the lease, and therefore felt that is was my responsibility to pay a fair price to get out from under it. I feel like I offered a price that was more than fair. However, until we agreed to terminate the lease, all responsibilities of both parties were in play. What has transpired since my offer constitutes unethical conduct that may even be considered entrapment, considering the 2 month delay, and giving me no offer to occupy before placing me in default! Because of the way the landlord has shirked his responsibility, and has basically demanded I hold up my end of the lease while he denies his obligation strikes me as audacious, and I think his lawsuit is without merit.

If anyone is knowledgable in this area, or has experience with similar cases, I'd really appreciate any feedback.
 


HomeGuru

Senior Member
eyedoc said:
What is the name of your state?What is the name of your state? North Carolina


In April of 2004, I entered into a 5 year lease agreement with a landlord to take 1800 sqft. I had a consultant negotiate the lease for me, and an addendum was added that stated that the landlord was responsible for "buildout and all associated costs with the exception of carpet, paint, tile and cabinetry." My requested floor plan was also added as an addendum, and that page was initialed by the landlord. Less than two weeks after signing the lease, I found a better opportunity, and decided it would be in my best interest to terminate the lease and pursue the other opportunity.

I contacted the landlord and met with him face-to-face. I told him of my desire to terminate the lease, and explained my reasons. He was not happy about losing a tenant, but stated "I won't crucify you over this" and "if you want to leave, I won't make you stay." It was understood that there would be a penalty for letting me out of the lease, and I offered that the landlord keep monies already paid ($4,875) and I would also give him an extra $5,000 to free me from the lease. Not a bad deal considering he had incurred no costs of buildout yet and I had only had his space off the market for 12 days. He again said "I won't crucify you over this," but indicated that he had to discuss the situation with his business partners first. We left the meeting with a handshake.

I called the landlord a week later to see if he would accept my offer to terminate the lease, and his response was that he still hadn't talked to his business partners. After 2 months of phone calls, most of which were never returned, the landlord still neglected to give me a definite answer as to whether he would accept my offer. My occupancy of the location was to have begun on July 1, 2004.

On July 12, 2004, I recieved a letter from the landlord that served to notify me that I was in default of the lease for failure to occupy. He indicated that he was putting the space back on the market, and that I either needed to begin paying rent, or I could pay 1 year of rent + CAM and pay the realtor his commission. This came to approximately $45,000, in addition to monies already paid.

I do not believe that I am in default of this lease agreement for a couple reasons. First, it was the landlord's responsibility to prepare the space for my occupancy, which he has failed to do. The location still has no walls and a gravel floor. Not only does it not meet the floorplan agreed upon in the lease, but it also lacks the minimal "vanilla shell" that would have been required otherwise. Also, in it's current shape, the space doesn't even qualify for a certificate of occupancy in this county. In effect, it's not legal to rent. Second, the landlord never offered me keys, and never officially contacted me to put the property in my possession.

I understand why the landlord did not build out the location - he didn't expect me to occupy it. However, until he and I reached a mutually agreeable term to terminate the lease, he still had a responsibility to prepare the location. The fact that he avoided contact with me for 2 months is his problem, not mine. If he had expected me to pay significantly more than I had offered, I should have been made aware of that in a timely manner, and I could have exercised my right to occupy the space, and would have had to forego the other opportunity. As it stands, the landlord has taken that option from me.

At this point, the landlord has sued me for back rent (since lease commencement on August 1, 2004) and attorney's fees. He has sued me in conjunction with the real estate agent, who is seeking his full commission from me. Obviously, I don't feel obligated to pay either of them. I did initially ask to terminate the lease, and therefore felt that is was my responsibility to pay a fair price to get out from under it. I feel like I offered a price that was more than fair. However, until we agreed to terminate the lease, all responsibilities of both parties were in play. What has transpired since my offer constitutes unethical conduct that may even be considered entrapment, considering the 2 month delay, and giving me no offer to occupy before placing me in default! Because of the way the landlord has shirked his responsibility, and has basically demanded I hold up my end of the lease while he denies his obligation strikes me as audacious, and I think his lawsuit is without merit.

If anyone is knowledgable in this area, or has experience with similar cases, I'd really appreciate any feedback.
**A: I take it your are talking about a commercial lease. Would this leased space be in a shopping center, office building etc?
 
Last edited:

eyedoc

Junior Member
Yes, this was a commercial lease in a newly built strip center. There are 3 spaces left to rent, and they are still without walls or a floor. The space I was to take looks like it hasn't even been entered in months.
 

HomeGuru

Senior Member
eyedoc said:
Yes, this was a commercial lease in a newly built strip center. There are 3 spaces left to rent, and they are still without walls or a floor. The space I was to take looks like it hasn't even been entered in months.

**A: Ok, time to see a real estate attorney.
 

eyedoc

Junior Member
I'm working with an attorney now. She's not specifically a real estate attorney, but she's got alot of experience with real estate cases. She has told me not to worry about this; she thinks the case is without merit, and that the landlord is just trying to scare me into settling for as much cash as he can. I guess the reason for my post on this forum is that until this thing is over, it's on my mind, and I just wanted some additional input.
 

HomeGuru

Senior Member
eyedoc said:
I'm working with an attorney now. She's not specifically a real estate attorney, but she's got alot of experience with real estate cases. She has told me not to worry about this; she thinks the case is without merit, and that the landlord is just trying to scare me into settling for as much cash as he can. I guess the reason for my post on this forum is that until this thing is over, it's on my mind, and I just wanted some additional input.
**A: then hire the attorney and take a proactive stance.
 

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