USA Law and Practice Contributed by: Richard L. Rosen, Leonard S. Salis and Dennison Marzocco, Rosen Karol Salis PLLC
6.22 Termination by a Third Party No federal, state or local government has authority to terminate a lease that is entered into by private par - ties. However, governmental authorities may have a right of eminent domain that permits them to “take” property for public use and pay “just compensation” to the owner. As a “taking” would render moot any lease at the premises, leases typically provide for their termination, with no further obligation by either side, under such circumstances. 6.23 Remedies/Damages for Breach In the event of breach and termination, landlords’ remedies vary based on the applicable jurisdiction. For example, a landlord’s potential “double recovery” of rent (ie, for the unexpired portion of the lease and collecting rent after it has re-let the premises) will vary based on applicable law, and may be permitted where (for example) the prematurely vacating tenant chooses not to engage in the discovery process in the litiga - tion (to find out whether the landlord has re-let the premises). Landlords are often precluded from using “self-help” to evict tenants (for example, by locking the tenant out), as opposed to going through the court eviction process. Self-help evictions are illegal in most states and usually result in a lawsuit by the tenant. Landlords who engage in self-help evictions can face damages, fines, criminal charges and pos - sibly jail time. As discussed in 6.8 Costs Payable by a Tenant at the Start of a Lease , landlords typically require ten - ants to tender a security deposit (usually “cash”, but sometimes a letter of credit is utilised) when the lease is being entered into, in order to protect the land - lord against a tenant’s failure to meet its obligations, including the payment of rent and additional rent. The amount of the security deposit is usually negotiable, but not always, and it often ranges from two to six times the monthly base rent. Often, the amount of security increases as the rent increases over the term of the lease, but in some leases tenants are able to negotiate for the security to decrease over time.
Franchisees (tenants) may also wish to negotiate with the landlord to include such a provision in the lease (to simplify the lease assignment process when they seek to sell their franchised business) even where the franchisor has not required or sought to include such a provision in the lease. 6.19 Right to Terminate a Lease Generally, a landlord will terminate the lease when the tenant fails to cure a default, whether monetary or otherwise. Leases commonly provide that the landlord may terminate the lease without the tenant having an opportunity to cure the default, upon the occurrence of certain triggering events, including (for example) if the tenant files for bankruptcy, is insolvent or permits an illegal activity to be conducted at the leased prem - ises. Leases may also permit either or both sides to terminate the lease if a casualty occurs to a significant portion or the entirety of the leased premises, and if the leased premises are incapable of being restored within a defined time period. 6.20 Registration Requirements Leases do not typically require registration or execu - tion formalities (unlike other real estate documents, such as deeds). Most states do not require that a lease (or memorandum of lease) be recorded as a public record, although many states permit such publica - tion. However, landlords sometimes prohibit the ten - ant from recording the lease (or a lease memorandum) because the landlord does not want its lease (or its key terms) to be publicly available. 6.21 Forced Eviction If the landlord terminates the lease in accordance with its terms (eg, following a default that either was not timely cured or was not curable), the landlord may commence a court proceeding to evict the tenant. The process for evicting a tenant varies widely depending on the jurisdiction and whether the tenancy is resi - dential or commercial. (The eviction process for com - mercial tenancies moves much more quickly.) While many jurisdictions passed eviction moratoria (and sometimes even foreclosure moratoria) during the COVID-19 pandemic, virtually all such tenant protec - tions have expired as of the writing of this article.
719 CHAMBERS.COM
Powered by FlippingBook