The Law

Secret Lease Addendum: Fail by Ron Davis A signer of a shopping center lease on behalf of a tenant is not always obligated if the tenant later defaults on the lease terms. That was a lesson a Florida shopping center owner recently learned after a tenant stopped paying rent and the owner tried to collect restitution. The shopping center, located in the Fort Lauderdale area, leased space to the tenant in 2003 for a five-year term. Because the tenant operated as a corporation, however, the corporate president signed the lease and hand-printed his name directly below the signature line. Also below the signature line is hand-printed the following: “*Note—Personal Guaranty” and, “The tenant signature above also indicates acceptance of personally guaranteeing this lease and is being freely given….” The lease then defines guarantor as “any person…who has executed or has agreed to execute any guaranty of tenant’s obligations hereunder.” Finally, the lease terms allow the tenant to sublet the premises, but provide that the tenant and guarantor remain liable for all lease obligations. But the tenant’s president later argued that the hand-written notation below his signature was added after he signed the lease and without his knowledge or consent. That became an important point after the tenant stopped paying rent in 2006 and the shopping center owner sued the tenant and the tenant’s president. A Florida court ruled that the tenant’s president is personally liable as guarantor of the tenant’s lease. The judge therefore ordered him and the tenant to pay rent for the balance of the lease term, less rent paid by any new tenant that leases their premises. The tenant’s president appealed that ruling, contending that he is not personally liable for the performance of the lease. A Florida appellate court agreed with the tenant’s president, explaining that the language of the lease agreement defines a guarantor as any person who has executed or has agreed to execute any guaranty of the tenant’s obligations. Yet, the court added, nowhere in the lease or in any attending documents are the terms and conditions defined or executed by the tenant’s president. In fact, the court concluded, he swore that the hand-written language below his signature acknowledging him as guarantor was added after he signed the agreement and without his knowledge. (Fairway Mortgage Solutions, Inc. v. Locust Gardens, 2008 WL 2906919 [Fla.App. 4 Dist.]) Decision: August 2008 Published: September 2008