JJD-HOV Elk Grove v. Jo-Ann Stores, LLC

Facts: A landlord leases commercial space to a tenant in a multi-tenant property. The landlord induces the tenant to enter into the agreement by including a rent payment provision for monthly rent reduction based on the vacancy status of other spaces in the property. Another rent provision set a fixed minimum rent payment during the term of the lease. Two anchor tenants vacate the property and the tenant pays a reduced rent based on the vacancy status rent provision. The landlord pursues recovery of the difference in reduced rent the tenant paid and the greater amount set by the fixed minimum rent provision in the lease agreement.

Claim: The landlord claims the tenant owes the difference in rent since rent adjustment provisions based on vacancies in other spaces is unenforceable.

Counterclaim: The tenant claims the reduced rent provision based on tenants vacating other spaces is enforceable without concern for the separate minimum rent provision since the reduced rent provision would be meaningless as the rent adjustment formula was intended to control when tenants vacate.

Holding: A California appeals court holds the tenant properly paid the reduced rent and the fixed minimum rent provision does not apply since the provision for an adjustment in rent when tenants vacate is a condition agreed to in the lease agreement. [JJD-HOV Elk Grove v. Jo-Ann Stores, LLC. (June 28, 2022) _CA5th_]

Read JJD-HOV Elk Grove v. Jo-Ann Stores, LLC. here

Related reading:

Real Estate Property Management

Chapter 42: Commercial lease agreements

Related form:

See RPI Form 552