April 10, 2015
Many commercial lease agreements contain provisions that give a tenant, landlord, or both parties the right to end the lease term early in certain circumstances. The key to utilizing these terms to your advantage is to understand completely what rights the agreement gives you, and availing yourself of those rights promptly. A Camden County commercial tenant found this out, losing its breach of lease case centering on this provision in its lease. The New Jersey Superior Court, Appellate Division upheld a ruling that said the tenant was prohibited from raising the argument because the tenant had already done so in the landlord’s previous summary dispossession action, which had concluded with a judgment in favor of the landlord.
The dispute involved tenants Rondell and Danyelle Thurman, operators of the Phenomenal Hair Salon in Camden County and their landlord, Lindenwold Center LLC. In 2001, the salon owners signed a lease to rent a 1,355-square foot space in a shopping center owned by the landlord. The shopping center had two sets of entrances and exits, one providing access to each of two public highways.
The parties’ lease contained an “out” clause stating that either the landlord or tenant could terminate the lease early, in some situations, if the government exercised its power of eminent domain. The lease was clear that these circumstances were limited to situations where “more than 50%” of the rentable floor space or common areas were taken or condemned, or if the taking or condemnation deprived the tenant of “reasonable vehicular access to abutting public highways serving it prior to the condemnation.”
During the salon’s time at the center, the county undertook a construction project involving grading the entrance and exit from the center to one of the highways. At no time during the project did the work affect the entrance and exit providing access to the other highway.
In 2010, the landlord brought the tenant to court on a summary dispossession action, claiming the tenant defaulted on the lease. The parties entered into a consent judgment, in which the tenants agreed to leave the space and to make a $1,800 payment to the landlord. Later, though, the salon owners sued the landlord, claiming that the landlord had breached the lease and committed fraud when it failed to tell the salon owners about the county’s road work project.
The trial court and the appeals court ruled against the salon owners, concluding that the legal principle of res judicata prevented them from bringing their lawsuit. Res judicata is a Latin legal phrase meaning, generally, that the matter is already decided. Res judicata bars a lawsuit if a court entered a previous order that was a final judgment involving the identical parties and covered the same or similar grounds for suing. In the salon owners’ case, the consent judgment in the summary dispossession case was a final ruling, involving the identical parties (Lindenwold and the Thurmans) and centered around whether or not the county’s work project voided the lease.
The landlord’s success in these cases illustrates the importance of constructing lease agreements that are clear regarding the rights and responsibilities of both the landlord and the tenant. For reliable advice and representation as you negotiate and construct your commercial lease agreement terms, consult the real estate attorneys at Samuel C. Berger, P.C. Our New Jersey real estate attorneys can help you in putting together a lease agreement that protects your business position. Reach us online or call (201) 587-1500 or (212) 380-8117 to schedule a free, confidential initial consultation today.
More Articles:
Early Termination of New Jersey Commercial Leases and Rent Acceleration Clauses, New York & New Jersey Real Estate Lawyer Blog, Feb. 13, 2015
Landlord Wins on Security Deposit, Loses Rent and Damages Claims in Appellate Division, New York & New Jersey Real Estate Lawyer Blog, Oct. 10, 2014