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by Ron Davis

How accurate must a shopping center owner be when discussing the property with a potential tenant?

That question arose in a recent case in Florida, where the owners of a Miami-area shopping center have had to answer to charges that they did not disclose vital information about the center when negotiating a tenant lease.

The shopping center, owned by Camena Investments & Property Management Corp., leased space to the tenant for the operation of a restaurant. Prior to the tenant’s signing of the lease, however, the leasing agent for Camena apparently assured the tenant that she could open her restaurant by a certain date.

When the tenant discussed her plans with local building and zoning officials, however, they told her she could not open a restaurant in the space she had leased because there would not be enough customer parking spaces. A local restriction on the property required her to obtain a variance if she wished to open a restaurant of the size she hoped for and had discussed with Camena’s leasing agent. The tenant eventually opened the restaurant, but well after the set date.

Soon, the restaurant began experiencing financial difficulties, and the tenant stopped paying rent. Camena responded by suing to evict the tenant. In her defense, the tenant claimed that Camena’s agent fraudulently misled her during lease negotiations.

The issue before the court, then, was whether the tenant should have checked with building and zoning officials before signing the lease with the shopping center.

A Florida appellate court ruled that the tenant has a right to sue for fraud in such an instance. Explained the judges, "While a buyer of property might be expected to search public records before a real estate closing and a contractor might also be expected to search the public records for flood zones prior to obtaining a building permit, these types of searches are not expected to be performed as standard procedure by a party entering into a commercial lease." (Camena Investments v. Cross, 791 So.2d 595 [Fla.App. 3 Dist. 2001])

Decision: September 2001
Published: January 2002

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