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A Taxing Situation
by Ron Davis

A tenant’s failure to pay his property taxes to his local government is the kind of offense that a shopping center management frowns on. That’s especially true if the shopping center is itself a government-owned institution.

Such were the circumstances in a recent case in Florida. The government institution involved—the Canaveral Port Authority—manages a shopping center in the Cape Canaveral area. And the tenant leased space to operate a restaurant there.

The tenant maintained a good record of rental payments, but he was not so diligent in paying his property taxes and eventually owed nearly $80,000.

His shopping center lease was specific about tax obligations. It stated that “lessee shall pay all taxes levied upon the leased premises during the lease term.” So the Canaveral Port Authority eventually began efforts to evict the tenant based on his tax delinquency.

In response, the tenant argued that Florida law does not require payment of property taxes as a precondition of leasing space from a government institution. He added that the state’s requirements of tenancy are limited to rental payments and do not apply to another default in a lease agreement.

Meanwhile, the tenant declared bankruptcy in hopes that the courts would prevent his eviction. A Florida court ruled, however, that neither the bankruptcy action nor his satisfactory rent-payment record could prevent the tenant’s eviction. Explained the judges, “Clearly, the tenant’s obligation to pay property taxes constituted consideration to use or occupy the property. The fact that this obligation was contained in the lease cannot change its characterization as a rent obligation…. Because these taxes had not been paid, the entry of the order of eviction is proper.” (Cascella v. Canaveral Port Authority, 827 So.2d 308 [Fla.App. 5 Dist. 2002])

Decision: November 2002
Published: January 2003



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