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Print Page Ambiguity is an Ambiguous Concept
by Ron Davis

Overly generous lease terms have almost prevented a Missouri shopping center from collecting past-due rent from a tenant.

The shopping center, located in the St. Louis area, had leased space to the tenant for the operation of a restaurant. In so doing, the center’s owner allowed the tenant to unilaterally assign the lease—and without the owner’s consent. The tenant was still liable for the lease requirements after an assignment, but only if assignee should be of lesser net worth than the tenant at the time of the transaction.

Moreover, even though the tenant did personally guarantee lease performance in case of assignment, that requirement could not be enforced if the assignee’s net worth should exceed $500,000.

Those terms were soon put to a test when the tenant assigned the lease to another restaurant owner, who, after a few months of operation, fell behind in paying his rent. When the shopping center owner then tried to collect from the tenant as guarantor of the lease, the tenant refused, claiming full compliance with the lease terms.

The shopping center owner responded by suing to collect from the tenant, pointing out that the assignee had never disclosed his net worth. And a Missouri court ordered the tenant to pay the rent. The tenant then appealed, arguing that the requirements of the lease were ambiguous and were therefore unenforceable.

A Missouri appellate court, in also ruling in favor of the shopping center owner, noted that even though the tenant could freely assign the lease, he offered no proof that the net worth of the assignee exceeded $500,000. Therefore, added the judges, “the language of the agreement imposes liability on the tenant for charges due under the lease that are not paid by the assignee.”

As to the tenant’s argument that the terms of the lease were ambiguous, the judges explained, “An ambiguity does not exist merely because the parties dispute the contract’s meaning.” (Northwest Plaza, L.L.C. v. Michael-Glen, 102 S.W.3d 552 [Mo.App. E.D. 2003])

Decision: April 2003
Published: May 2003

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