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Ambiguous Lease Not A Guarantee
by Ron Davis

Efforts of a Colorado shopping center landlord to oust an unwanted tenant from the premises have not gone as smoothly as the landlord had hoped.

The shopping center, Montview, owned by HIT Inc., is located in Aurora, and the tenant operates a business there named Platinum Play Family Fun and Event Center. That arrangement, however, turned sour a year or so ago, and the Platinum Play tenant faced ejection through a forcible entry and detainer action. Such a choice would allow the landlord to retake outright possession of the tenant’s leased premises.

But such an approach is not as simple as that. When a written contract contains ambiguities, a court of law must resolve any doubts against the drafter. Among the guiding principles in a case of that type is the general maxim that a contract should be construed most strongly against the drafter.

The tenant in this case, however, was able to delay repossession of the leased space by filing for bankruptcy. That allowed the Platinum Play business to continue to operate as usual at the center.

Another problem arose when it was noted that the lease with the tenant appeared “unprofessionally drafted.” Moreover, the lease apparently contained information that was rife with errors. The primary difficulty, however, was in the main body of the tenant’s lease. First of all, the tenant was never identified by name. Then, there was duplication of some of the wording of the lease with the tenant.

All in all, the court pointed out, the lease is a “hodgepodge that contains numerous internal contradictions.” Such problems, added the court, must be a guide of the general principles that have evolved concerning the interpretation of contractual provisions. Among these principles is the general maxim that a contract must be construed most strongly against the drafter.

Therefore, the court concluded, “We find that the debtors are guarantors of Platinum Play’s obligations under its lease with HIT. That’s because it was Platinum Play that was in possession of the premises and owed the rent obligation under the lease. So the debtors do not owe any administrative rent obligation to HIT.” The claim by HIT, added the court “is entitled to treatment as “a general unsecured claim.”

(Only the Westlaw citation is currently available. U.S. Bankruptcy Court, D.Colorado Slip Copy, 2015 WL 6526809)

Decision: December 2015
Published: January 2016



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