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Lease Beats Lawsuit
by Ron Davis

A shrewdly worded tenant lease that anticipates future problems can prove to be a blessing for a shopping center owner.

Consider, for example, the lease between the owners of Palisades Shopping Center in Clarkson, NY, and one of their tenants. Those two parties negotiated over space that the tenant wanted for the operation of a restaurant. The tenant eventually settled for a location that seemed suitable but that may not have been the tenant’s first choice.

Soon, the tenant apparently began experiencing financial difficulties, then stopped paying the rent due. The shopping center’s owners responded by sending the tenant notices of default. A few months later, the tenant closed the restaurant, and the shopping center’s owners consequently notified the tenant of the termination of their lease and that legal action would follow.

The tenant claimed, however, that agents for the shopping center had made false promises and misrepresented facts to induce the tenant into signing the lease. The tenant specifically mentioned that the agents induced them into taking a less desirable space than that which the tenant wished to occupy. As part of that enticement, the tenant said, was a pledge to renovate the less desirable site and remove an unsightly lighting fixture located near that space. Neither promise, the tenant added, was kept.

But the lease prepared for the shopping center’s owners seemed to foresee such a challenge. One of the lease terms stated, for example, that in signing the document the tenant “hereby waives any and all claims against the enforcement of this lease which are based upon allegations of representations, projections, estimates, understandings, or agreements by the landlord…that are not contained in the express terms of this lease.”

And another lease term stated, “Tenant acknowledges and agrees that neither the landlord nor any representative of the landlord …has made any representation to or an agreement with tenant relating to the premises, this lease, or the shopping center which is not contained in the express terms of this lease.”

The tenant nevertheless argued that the shopping center’s owners committed fraud by failing to keep their promises.

Based on the agreement signed by the tenant, a New York court ruled in favor of the shopping center’s owners, explaining, “The tenant has failed to specify which facts supporting their position exist, nor does the statement provided by the tenant substantiate any allegations of fraud.” (Eklecco Newco v. Café Tu Tu Tango Palisades, Slip Copy, 2008 WL 324132 [N.Y. Sup.])

Decision: February 2008
Published: February 2008



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