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WHAT IS THIS THING CALLED QUIET ENJOYMENT? By: Ira Meislik, Meislik & Levavy I doubt that most people reading this know what
is really meant by the "covenant of quiet
enjoyment." Understandably so. Because quiet
enjoyment is a common law concept, case law is the sole
source of its definition. The definitions constructed in
real property treatises come from case law. Even in civil
code jurisdictions, where an implied covenant of quiet
enjoyment in leases is imposed by statute, the definition
of quiet enjoyment is found only in case law. The Restatement
(Second) of Property tells where the law is going,
not where it is. Dealing with quiet enjoyment would be a lot easier if
the concept was implicated and analyzed in only a small
number of well reasoned opinions which were consistent
both over time and from state to state. Alas, would that
were the case. Anyone who has ever searched cases for a
point and come up dry should remember the ancient Chinese
proverb, "be careful what you wish for, you may get
it." Thousands of reported cases deal with the
covenant of quiet enjoyment. Defining the problem is not the sole challenge. The
law varies greatly from state to state. Common law did
not distinguish between residential and commercial
leases, but modern law does. The law of quiet enjoyment
is changing quickly in some jurisdictions, but not in
others. The covenant of quiet enjoyment now means
something different in deeds than it means in leases,
(although some judges are having problems with the
differences). Cases involving quiet enjoyment as an
implied covenant vastly outnumber those dealing with it
as an express covenant, but one can reasonably surmise
that in most situations, the lease in suit did contain a
quiet enjoyment provision. Most cases slur distinctions
between concepts of constructive eviction and those of
quiet enjoyment, probably because almost all tenant's
attorneys choose to plead both of them as defenses and as
causes of action. Speaking of defenses, most claims of
breach of the covenant of quiet enjoyment arise as a
tenant's defense against a rent action. In those cases,
it frequently isn't hard to discern that a scream of
"breach of quiet enjoyment" is a screen for a
more fundamental breakdown of the landlord-tenant
relationship. Lastly, breach of the covenant of quiet
enjoyment is a catchall claim when neither the tenant nor
the court can find an express lease term that has been
violated. With this as background, we'll now try to cut a path
through the thicket and create a guide to understanding
just what is meant by the "covenant of quiet
enjoyment" and where that concept is going. It won't
be easy. Some states haven't moved out of the nineteenth
century and others are already in the twenty-first. Not
all states now holding a "modern" view got
there gradually. Some courts just got tired of the
"old" law and took a leap forward. Therefore,
it is critical to know where the law is going, because,
in drafting leases and in resolving simmering disputes,
yesterday's ruling may not be today's "law of the
case." What Is It? Over the term of a lease, there are times when a
landlord may interfere with its tenant's actual or
hoped-for use of the leased premises. Not every one of
these interferences will be found to be a breach of an
express covenant in the lease. Nonetheless, the tenant's
ability to use and enjoy the premises may have been
permanently and intentionally harmed by an act of the
landlord or of someone for whose conduct the landlord is
responsible. It is for such cases that the law implies a
special covenant in every lease -- the covenant of quiet
enjoyment. This covenant exists even if the lease is
silent on the subject. In fact, the presence of an
express covenant of quiet enjoyment in a lease actually
serves to limit, not expand, a tenant's rights. The covenant of quiet enjoyment means different things
in different places, at different times, and in different
settings. What's worse, every court speaks as if everyone
knows, or should know, which of these meanings is
supposed to apply to the case at bar, a practice which
makes for great difficulty in trying to write a clear,
"user friendly" guide to the subject. What is
more, application of the covenant depends on time and
place -- time, because the coverage of the covenant is
expanding with the modernization of real property law;
and place, because some jurisdictions are still years and
even decades behind this trend. Nothing can illustrate this point better than a
comparison of two rulings from 1995, when Ohio and New
Hampshire looked at the same problem and came to very
different conclusions. The Ohio court wrote: Moreover, under the law, 'a covenant of quiet
enjoyment is [only] an assurance against a defective
title * * *. It goes to possession.' [citations omitted]
Thus, there is no breach of the covenant for quiet
enjoyment unless there be actual constructive eviction of
the lessee. [citations omitted]. * * * Further, under the law of Ohio, a commercial landlord
does not impliedly warrant that commercially leased
premises would be suitable for a particular intended
purpose. ... Thus the law in Ohio is harsh toward
commercial tenants. * * * The law in Ohio in essence requires a commercial
tenant to vacate the premises before becoming entitled to
recover damages for breach of the covenants of quiet
enjoyment and/or habitability, if any.(1)
At the same time that the Ohio courts had that to say,
the courts in New Hampshire expressed the following
thoughts: The complexities, interconnectedness, and sheer
density of modern society create many more ways in which
a landlord or his agents may potentially interfere with a
tenant's use and enjoyment of leased premises. Even
without rising to the level of a constructive eviction
and requiring the tenant to vacate the premises, such
interferences may deprive the tenant of expectations
under the lease and reduce the value of the lease,
requiring in fairness an award of compensatory damages.
Moreover, under modern business conditions, there is 'no
reason why a lessee, after establishing itself on the
leased premises, should be forced to await eviction by
the lessor or surrender the premises, often at great
loss, before claiming a breach of the covenant for
interference with the use and possession of the premises'
that is not substantial enough to rise to the level of a
total eviction. [citations omitted] Likewise, the
landlord's greater level of knowledge of and control over
the leased premises and the surrounding property
militates in favor of a more modern view of the covenant
of quiet enjoyment than the trial court adopted. * * * We note, however, that our holding as to the
definition of a covenant of quiet enjoyment effects a
change in the common law in New Hampshire... .(2) So, what does this teach us? The law on one side of
the fence may be radically different from that on the
other. But don't despair, the fences are coming down. Let's Start Again It is now universally agreed that breach of the
covenant of quiet enjoyment involves an interference with
possession of the premises by a landlord, persons under
the landlord's direction or paramount title holders, but
not interferences by third parties.(3)
This is because all jurisdictions at one time viewed
leases as instruments of conveyance and not as contracts.
Since the covenant of quiet enjoyment is present both in
leases and in deeds and easements, courts are prone to
further confuse the whole subject matter by failing to
distinguish leasehold interests from fee and other real
property interests. On the other hand, jurisdictions on
leading edge of change have expanded the covenant to
guard against interference with "use and
enjoyment" of the leased premises. Confused? That's no surprise! "Interference with
use and enjoyment," a mantra frequently mouthed by
judges and commentators, just doesn't seem to help define
the covenant of quiet enjoyment. After all, not all of
the plethora of ways in which a landlord can interfere
with its tenant's use and enjoyment of the premises
amount to a breach of the covenant of quiet enjoyment. A Start Toward Reconciliation Every definition of the covenant incorporates the
concept that breach involves interference with a tenant's
rights. The key word is "interference," a word
which is susceptible to a number of definitions, all of
which may create an actionable claim. Here's a list of
interferences starting at the most obvious and working
toward the least: actual eviction; actual partial
eviction; constructive eviction; partial constructive
eviction; breach of the covenant of quiet enjoyment; and
breach of an implied warranty of suitability. At one end,
we see a clear and absolute deprivation of physical
possession. At the other end of the range, interference
with a tenant's enjoyment or use of its premises may be
tantamount to depriving a tenant of its physical
possession. Simply speaking, every unjustified eviction, actual or
constructive, total or partial, is a breach of the
covenant. On the other hand, not every breach of the
covenant of quiet enjoyment will constitute an eviction
in every jurisdiction. Tenant's Choice of Remedies
Why does this matter? It matters because it affects
both the tenant's choice of remedies and the route by
which it travels to obtain those remedies. Absent express lease language to the contrary, if a
landlord wrongfully evicts its tenant, i.e., actually
physically deprives its tenant of possession of the
leased premises, the tenant no longer has use of the
premises, no longer must pay rent, and has a cause of
action for damages. If a landlord wrongfully deprives its
tenant of physical possession of part of the leased
premises, the same result follows. Sometimes, a landlord
acts in such a way as to permanently and intentionally
deprive its tenant of the beneficial use of the premises,
or some part of the premises, or materially interferes
with its tenant's enjoyment of the leased premises. If
such acts indicate an intention on the landlord's part to
permanently deprive its tenant of that use and enjoyment,
its actions may be grounds for a claim of constructive
eviction. Not every interference with use and enjoyment amounts
to the basis for constructive eviction. Trivial or
temporary acts, although unwarranted, but not intended to
be a permanent expulsion, do not amount to an eviction.
The outcome depends on the materiality of the
deprivation; if the deprivation is trifling or produces
no inconvenience, it does not constitute an eviction.(4) Now, there's the
rub! For a tenant to claim constructive eviction, it must
abandon the leased premises. No matter how great the
disturbance, the tenant must leave by reason of the very
interference that gave rise to the claim of a
constructive eviction. Moreover, even in the case of a
partial constructive eviction, the tenant must abandon
the entire premises. Not only that, but the abandonment
must take place within a reasonable time. Try to understand the dilemma faced by a tenant.
Imagine a tenant who thinks it is being substantially
deprived of the core benefits of use and enjoyment for
which it bargained when it signed its lease. Imagine,
also, that by reason of an intentional act on the part of
its landlord (or someone for whose acts the landlord is
responsible), the tenant believes that its use and
enjoyment have been taken away. It can't find an express
term of the lease that the landlord has violated.
Therefore it must seek relief for a breach of some
landlord's obligation imposed by law. Based upon its
analysis of the situation, it chooses to claim that it
has been constructively evicted. If the tenant can't prove its claim, it is both out of the premises and still obligated to pay the rent (and possibly other damages as well). To claim constructive eviction, it must vacate the premises within a reasonable time. If it elects to stay in the premises, a tenant can not avoid its rent obligations. If a court believes that it has delayed its abandonment, it also loses. Its lease may limit its remedies by expressly prohibiting a claim of eviction. In essence, under the doctrine of constructive eviction, a tenant must take an all or nothing risk. What is a tenant to do under those circumstances where
it feels that it has been improperly treated but that the
landlord's acts neither rise to the level of a
constructive eviction nor are a breach of the letter of
the lease? Alternatively, what is a tenant to do if it
wants to stay in the premises? In those circumstances,
the answer is to affirm (continue) its lease and seek
damages or equitable relief. That's what the covenant of
quiet enjoyment is for. It covers the general claim of
interference with use and enjoyment where the language of
the lease provides no basis for a more specific claim. Definition By Example Justice Stewart's famous definition of pornography
incorporating the concept -- "[b]ut I know it when I
see it"(5), provides
a frame of reference for defining the covenant of quiet
enjoyment. Here's an example from Pennsylvania in 1915.(6) A tenant leased a
building for use as a theater. The building was adjacent
to adjoining property that the tenant used for storage,
offices, and dressing rooms. Patrons sitting in the
balcony and gallery of the theater entered through the
adjacent building and used openings between the two
building to get to their seats. The adjacent building
housed the theater's candy booth. The adjacent property
was not owned by the landlord. The landlord unilaterally
closed up all of the openings. Apparently, nothing in the lease prohibited the
closing of those openings nor did the lease promise
access to the adjacent building. Therefore, the court
determined that the landlord's action did not constitute
an entire or partial eviction from the leased premises
because there was no covenant that the opening should
remain open. The court, however, did rule that there
exists an implied covenant of quiet enjoyment in
commercial leases. What it said was that "any
wrongful act of the landlord which results in
interference of the tenant's possession, in whole or in
part, is an eviction for which the landlord is liable for
damages to the tenant."(7)
The court emphasized that the openings were part of
the building when the building was leased as a theater.
It noted that the openings connected the leased building
with the adjacent building and that the adjacent building
was intended, by the tenant, to be used as part of the
theater. Obviously, closing the opening caused injury to
the tenant. The court continued by opining that any
change in those openings "to the detriment of the
tenant was a violation of the tenant's implied covenant
for quiet enjoyment of the property. They were as much a
part of the theater , and as useful and necessary to its
operation, as the seats and stairway... . Had the
landlord closed the doors used for entering the theater
or the openings used as a means of exit... ," no
different result would have resulted. More than eighty years ago, a Pennsylvania court found
a remedy for a tenant that was neither physically
deprived of possession nor constructively evicted in a
traditional way. In fact, the court even pointed out
that, in its state, "there is no implied warranty
that the premises are fit for the purposes for which they
are rented, but there is an implied covenant for the
quiet enjoyment of the demised premises... ."(8) Here are some other examples where there was neither a
physical interference with a tenant's possession nor
breach of an express term of a lease. Notice the varying
ways in which different courts treated each tenant's
claims: Missouri, 1996. A commercial tenant
successfully brought an action for breach of the covenant
of quiet enjoyment when another tenant of the landlord,
but on a nearby property, obtained an injunction to bar
the aggrieved tenant from operating a grocery store. The
nearby tenant was the beneficiary of a restrictive
covenant against competing grocery stores, imposed on the
landlord's other nearby properties. The use clause in the
injured tenant's lease permitted a grocery store as well
as "all other uses not prohibited by law or local
ordinance." Even though the tenant could retain
possession of the leased premises and use the store for
other than a grocery, the court held that the covenant of
quiet enjoyment was breached.(9)
California, 1931. A tenant
constructed a real estate office on leased property, but
during the term of the lease, his landlord caused two
buildings and a high fence to be constructed within
inches of the tenant's building. This blocked both the
public's view of the building and the tenant's
advertising signs. In effect, the tenant's building was
blocked in. A California court, in 1931, found a breach
of the covenant of quiet enjoyment.(10)
New York, 1994. A restaurant tenant
complained that poor water quality and intermittent
supply disruptions prevented it from successfully
operating for its intended use. The court distinguished
between the issues of water quality and water supply.
With respect to quality, it ruled that the lease required
the tenant to maintain the water supply equipment at the
premises and therefore it was not "deprived of
something to which he was entitled under or by virtue of
the lease." With respect to the occasional supply
disruptions, the lease was silent. Determining that the
defective pipe lie outside of the leased premises, but on
the landlord's land, the wrongful act of the landlord in
failing to maintain a proper water supply constituted a
breach of the covenant of quiet enjoyment. The landlord's
failure "substantially and materially deprived
tenant of the beneficial use and enjoyment of the
premises." Presumably, had the water supply not been
critical for operation of a restaurant, no breach would
have been found.(11) Washington, 1996. A fitness club
alleged that the condition of the building's common areas
was so shabby that, in its tough business, customers
passed it by and selected other clubs whose surroundings
were in much better shape. Specifically, the dirty,
threadbare, wavy, and torn carpets were alleged to be
"so poor that it constitutes a safety and liability
hazard." The public corridors were dirty and gouged.
The landscaping consisted of dead plants and the Landlord
failed to properly maintain and clean decks and walkways.
The court characterized the breaches as going to issues
of suitability, but would not find a breach of the
covenant of quiet enjoyment. In rejecting the tenant's
claim, it implied that had this been a residential lease,
the result would have been different.(12)
Pennsylvania, 1996. When first
leased, a dry cleaning store was open and visible to the
public. The landlord subsequently constructed a
mini-mall, incorporating the dry cleaners as an interior
store. As a result, tenant lost the use of its prominent
display window and easy access to parking. No lease
provision prohibited these alterations. These acts were
found to be a substantial interference with "the
tenant's anticipated use of the premises and represent a
breach of the covenant of quiet enjoyment."(13) Wisconsin, 1987. An employee of the
landlord, using a torch to cut protruding bolts,
unintentionally started a fire that heavily damaged the
tenant's premises. Tenant's fire insurer sought damages
under the theory that the substantial damage deprived
tenant of its premises and constituted a breach of
Landlord's covenant of quiet enjoyment. The lease did not
provide for landlord's indemnification of its tenant. The
court held that an essential element of a breach of the
covenant is that the alleged acts be intentional. Thus,
relief was denied.(14) Tennessee, 1990. Landlord engaged a
roofing contractor to repair a badly leaking roof. The
contractor was incompetent and during the course of
repairs, a great deal of water entered the premises.
Tenant's inventory and fixtures were badly damaged and
its business was substantially interrupted. The court
opined that the cause of the interference was the
negligence of a properly selected contractor and
therefore the landlord did not breach the leases's
express covenant of quiet enjoyment. If the independent
contractor's work necessarily would have interfered with
tenant's quiet enjoyment, it appears that a breach would
have been declared. Since the roofer could have done its
work without interfering with tenant's enjoyment, but
didn't, the landlord is not liable.(15)
Florida, 1958. Tenant rented a
portion of the first floor of a building for use as a
retail clothing store. Landlord's substantial remodeling
of upper floor space almost resulted in complete
destruction of tenant's clothing business. The court,
feeling it unjust to require that tenant first have
abandoned the premises, awarded damages for the breach of
the covenant of quiet enjoyment. Landlord argued that the
interference was caused by acts of an independent
contractor. In rejecting this defense, the court found
that there was no way that the alterations could have
been done without harming the tenant and therefore,
independent contractor or not, the landlord caused the
damage.(16) Tennessee, 1989. After the parties
failed to successfully negotiate a lease renewal, the
landlord embarked on a pattern of making increasingly
strident and assertive claims against its tenant.
Ultimately, through counsel, Landlord falsely claimed
that tenant was in breach of the expiring lease and
demanded accelerated payment of rent and other charges.
The court, citing 52 C.J.S., Landlord and Tenant, Sec.
458, concluded that landlord's improper conduct in
interfering with the beneficial enjoyment of the premises
by threats of expulsion and a pattern of unreasonable
demands constituted a breach of the covenant of quiet
enjoyment.(17) Florida, 1987. A seller of patio
furniture in a shopping center complained of loud music,
screams, shouts, and yells coming from adjacent space
leased to an exercise studio. Landlord acknowledged its
obligation to remedy the situation, but did nothing. The
noise was found to essentially deprive tenant of its
beneficial enjoyment of the premises, resulting in a
breach of the covenant of quiet enjoyment.(18) North Carolina, 1990. Landlord
breached its lease obligations by failing to repair a
badly leaking roof. Tenant, unwilling to rely on damages
alone, left the premises claiming that landlord's breach
rendered the premises unfit for its use as a restaurant.
Agreeing with the tenant, the court stated that the
landlord's "action constituted constructive eviction
which automatically operated as a breach of the implied
covenant of quiet enjoyment."(19)
Georgia, 1987. An accounting firm
occupied premises in an office building that underwent
extensive renovation. Landlord conceded that there was
substantial disruption at the building. None the less,
the accounting firm did not vacate its premises and
continued it business during the renovation. Landlord
showed that its construction was conducted in a manner
designed to minimize disruption of its tenant's
businesses. No breach of the covenant was found.(20) Arizona, 1986. Tenant signed a lease
with the acknowledged intent of operating a decorative
rock landscaping business. No express warranty of this
use was in the lease. After the business grew
considerably, neighbors complained to the municipality
about the way in which the premises were used.
Investigation revealed that the property was not zoned
for tenant's use and tenant was barred from continuing
its business. As a result, tenant claimed that landlord
deprived it of its quiet enjoyment. The court disagreed,
saying, "[t]he fact that a tenant's enjoyment of the
demised premises is interfered with in the exercise of
police power, not due to any fault on the part of lessor,
is not a breach of the lessor's covenant of quiet
enjoyment."(21) New York, 1989. A luxury-quality
mens' store was located in part of the ground floor of an
historic and elegant hotel. Before the extensive,
hotel-closing renovation of the hotel, tenant's clientele
could enter the store from the street or through the
hotel lobby. The lease contained an exculpatory clause
relieving landlord of responsibility for interruptions of
its tenant's business resulting from the renovation
activity. The lease also promised access from the
premises to the hotel lobby, but the court felt that this
was not a guaranty that the hotel lobby would be open to
the public. While espousing that in the presence of the
exculpatory clause, the landlord would be liable to its
tenant if there also existed a breach of the covenant of
quiet enjoyment, no breach was found, probably because
the court believed that the tenant should have
contemplated a possible renovation and contractually
provided for its own protection.(22)
Illinois, 1989. A radio broadcaster
occupied premises in an office tower and had its antennae
on the roof of the 41-story building. Its lease
specifically limited its use to a radio broadcast
facility. Landlord subsequently constructed an adjacent,
64-story building. A building of that height would
interfere with the tenant's sole permitted use and
consequently its enjoyment of the premises. The court
denied a claim that the landlord breached its covenant of
quiet enjoyment, telling the tenant that it should have
anticipated interference from possible nearby, taller
buildings.(23) It is clear from this very limited sampling of cases
that a tenant takes a great risk in ceasing to pay rent
or abandoning its premises in reliance upon a claim that
its landlord has breached the covenant of quiet
enjoyment. Every reported case is very fact-specific and
differing courts have differing thresholds at which they
will side with the tenant. Except in the most progressive
states, tenants would be wise to stay on the premises and
use the covenant as a sword rather than as a shield in
defense of an eviction or collection action commenced by
its landlord. In states that provide for a right of
redemption, aggrieved tenants would be wise to retain
sufficient funds for deposit with the court or for
payment of the rent should a court decide against them.
In other states, unless it is abundantly clear to an
objective observer that a tenant will prevail, a smart
tenant should continue to pay rent while filing an action
for damages or appropriate injunctive relief against its
landlord. It would be disingenuous not to note that very many of
the reported cases on the subject arise in a common
context. A majority of cases are commenced by landlords
as rent or eviction actions; the tenant's claim of breach
of the covenant is posed as a defense or counterclaim.
Anyone reading a substantial volume of the cases will get
the sense that the defense is often raised without a
substantial basis. Raising the defense or counterclaim
under these circumstances appears to undermine the
credibility of those tenants that truly have a grievance
against their landlords. Fortunately or unfortunately,
depending upon whether you are a landlord or a tenant,
the practice of using the covenant of quiet enjoyment as
an all-purpose defense seems to make it difficult for a
legitimate tenant's claim to be recognized. Express vs. Implied Covenant
If a covenant of quiet enjoyment is implied in every
lease(24), why do leases
almost always contain an express covenant? The answer,
quite simply, is because landlords write the leases. A
Colorado court has said that "[i]n the absence of an
agreement to the contrary, there is an implied covenant
of quiet enjoyment of leased premises and the tenant is
entitled to possession of the premises to the exclusion
of the landlord."(25)
The corollary of this is that the parties can agree to
eliminate the implied covenant of quiet enjoyment. If
parties can eliminate the covenant entirely, they can
certainly limit it. If a lease contains an express
covenant, the express clause governs and abrogates any
implied covenant of quiet enjoyment.(26)
The Restatement (Second) of Property 5.6 concurs
that "[t]he parties to a lease may agree to increase
or decrease what would otherwise be the obligations of
the landlord with respect to the condition of the leased
property and may agree to expand or contract what would
otherwise be the remedies available to the tenant for the
breach of those obligations, and those agreements are
valid and binding on the parties to the lease unless they
are unenforceable in whole or in part because they are
unconscionable or against public policy." Even where
statutory, such as in California, the covenant of quiet
enjoyment can be modified or waived by a commercial
tenant.(27) A common formulation of an express clause conditions
the tenant's quiet enjoyment on its payment of rent. In
1955, a New York tenant sought to claim that its
landlord's breach of the covenant of quiet enjoyment
amounted to a partial constructive eviction. The alleged
breach was related to removal of toilet facilities and
demolition of an area that the tenant used as a storeroom
and shipping area. A key question was whether the space
in question was part of the tenant's premises. The tenant
never got to prove its claim because the court opined:
"[o]rdinarily, whether this area was included in the
original lease would present a triable issue of fact. It
is immaterial in the present case, since plaintiff failed
to perform the conditions precedent, i.e., the payment of
rent."(28) Another
common formulation requires that the tenant observe all
of the covenants, terms, and conditions of the lease
before "enjoying" the premises. This language
also serves to limit the applicability of the covenant of
quiet enjoyment. The extent of the covenant is not limited solely by
clauses that speak directly of an express covenant of
quiet enjoyment. All lease clauses are to be read
together, especially those clauses that are inconsistent
with the covenant. A typical situation is where a
tenant's quiet enjoyment is spoiled by reason of a
foreclosing lender voiding its lease. A clearer
landlord's breach of the covenant of quiet enjoyment
would be hard to find. Nonetheless, the following typical
situation is illustrative of how one lease clause shields
a landlord from a damage claim by its angry tenant. A Texas case arose when a landlord failed to make its
mortgage payments, its lender foreclosed and terminated
the tenant's lease. Even though this intentional act on
the part of a landlord permanently deprived the tenant of
its enjoyment of the premises, the tenant came up
empty-handed. In the court's reasoning, the implied
covenant of quiet enjoyment was precluded by the express
terms of the lease stating that the tenant accepted the
lease subject to existing and future mortgages.
Consequently, the tenant was left without a viable claim
against the foreclosing lender or against its own
landlord.(29) Sometimes, the fact that an express or implied
covenant of quiet enjoyment is overridden by a
controlling lease clauses should be obvious, but is not.
In a California case, the "default by landlord"
lease clause contained the following sentence, "[i]n
no event shall tenant have the right to terminate this
lease as a result of landlord's default and tenant's
remedy shall be limited to damages and/or an
injunction." By reason on its landlord's breach of
the covenant of quiet enjoyment, the tenant thought that
it could leave the premises and stop paying rent. But the
cited clause prohibited it from doing so. When the tenant
ignored the clause, vacated the premises, and stopped
paying rent, it, not landlord, was found to have breached
the terms of the lease, and the tenant was faced with a
damage claim by its landlord.(30)
There are other situations in which it is not always
obvious that a particular lease provision serves to limit
the covenant of quiet enjoyment. For example, a landlord
may undertake extensive renovation of its property, and,
in doing so, materially interfere with a particular
tenant's ability to use its premises. What might
otherwise be a valid claim on the part of the tenant
based upon a breach of its landlord's covenant of quiet
enjoyment, can be nullified by a lease clause expressly
granting the landlord its right to undertake the major
renovation.(31) In such a
case, courts reconcile the express rights of the landlord
with the implied rights of its tenant. Accordingly, counsel for landlords and tenants alike
should be alert to the limitations written into express
covenant of quiet enjoyment clauses and the interplay of
quiet enjoyment with all other express terms of a lease.
Intelligent and careful drafting will result in each
party enjoying the benefit of its bargain. In Bijan
Designer(32), the
court itself taught this lesson to the tenant and its
counsel, to wit, "I therefore take the opportunity
to note that especially where -- as here -- the value of
the leasehold takes into account the presence of the
landlord's clientele, tenants are well advised to provide
for the eventuality of temporary closing for renovation,
or at least to specify some limits to the exclusionary
clause concerning repairs."(33)
In a similar lesson taught by a federal court in
Illinois, a radio broadcaster was told that if it wanted
protection against its landlord building a taller
building adjacent to the one in which the tenant leased
its own space, it should have negotiated an express
provision to that effect.(34)
Recommendations The time to deal with the covenant of quiet enjoyment
is when the lease is written. Failure to do so will
invariably cause one party or the other to risk an
unpleasant surprise. With the hazy boundaries that courts
have drawn, the covenant of quiet enjoyment is relatively
broad. Unlike lease covenants more precise in nature,
such as those requiring a landlord to keep the roof in
good condition and free of leaks or requiring a tenant to
carry a specific minimum level of insurance, the covenant
of quiet enjoyment speaks of "interference with
enjoyment." This concept is almost one of equity,
allowing courts to work without strict guidelines in
ascertaining whether or not to grant relief to an
aggrieved tenant. A well thought out lease will limit the
uncertainties of this state of affairs. From the tenant's standpoint, there is no substitute for due diligence and inclusion of self-help cures within a lease. A tenant would be wise to insist that the lease include items that should be part of the implied covenant of quiet enjoyment as express warranties within the lease. Both landlord and tenant should be cognizant that because of the difficulties of proving damages, it may be advisable to include lease provisions for calculating damages. Landlords should insist on notice of alleged breaches and an opportunity to cure lease infractions. Leaving a determination of each parties' rights and remedies to a court is a foolish course to travel. Concluding Thoughts Real property law remains local law. Even though
commerce, knowing little about jurisdictional lines, has
brought about increased uniformity of result regardless
of state boundaries, real property law is still the law
of immovables. What happens in one state just doesn't
seem quickly to impact what happens in another. What is
more, despite judicial and legislative changes in
approach to commercial leases tend to lag well changes in
other areas. Nonetheless, a trend is clear. The law is
increasingly protecting the reasonable expectations of a
tenant that its landlord should not interfere with the
expected use of the leased premises. Courts at the
leading edge of leasing law have already begun to find an
"implied warranty of suitability" in commercial
leases. In doing so, they are saying that a landlord
promises its tenant that the leased premises are suitable
for their intended commercial purposes. Intertwined with
this forward-looking stand, is the related concept that a
tenant's obligation to pay rent and the landlord's
implied warranty are mutually dependent.(35)
But until every jurisdiction gets to that point, tenants
must protect themselves through thoughtful lease
negotiation and drafting. Through careful lease drafting,
Landlords, too, can limit their risk and exposure by
making certain that they are not exposed to the vagaries
of court imposed lease obligations. 1. Doll v. Rapp, 660 N.E.2d 542 (Ohio Mun. 1995). 2. Echo Consulting Services, Inc. v. North Conway Bank, 669 A.2d 227,232 (N.H. 1995). 3. Richard R. Powell, Powell on Real Property 16B-15,n13 4. 52 C.J.S. 447. 5. Jacobellis v. State of Ohio, 84 S.Ct. 1676, 1682 (1964) (J. Stewart, concurring opinion). 6. Kelly v. Miller, 94 A. 1055 (Pa. 1915). 7. Kelly, at 1056. 8. Id. 9. Shop 'N Save Warehouse Foods, Inc. v. Soffer , 918 S.W.2d 851 (Mo.App.E.D. 1996). 10. James v. Haley, 297 P. 920 (Cal. 1931). 11. Hidden Ponds of Ontario, Inc. v. Hresent,, 622 N.Y.S.2d 168 (N.Y.A.D. 4 Dept. 1994). 12. Sprincin King Street Partners v. Sound Conditioning. Club, 925 P.2d 217 (Wash.App.Div. 1 1996). 13. Pollock v. Morelli,, 369 A.2d 458 (Pa.Super. 1976). 14. Wausau Underwriters Ins. Co. v. Dane County, 417 N.W.2d 914 (Wis.App. 1987). 15. Marshalls of Nashville, Tennessee., Inc. v. Harding Mall Associates, Ltd., 799 S.W. 239 (Tenn.App. 1990). 16. Carner v. Shapiro, 106 So.2d 87 (Fla.Dist.Ct.App. 1958). 17. Tenn-Tex Properties v. Brownell-Electro, Inc., 778 S.W.2d 423 (Tenn. 1989). 18. Barton v. Mitchell Co., 507 So.2d 148 (Fla.App. 4 Dist. 1987). 19. Marina Food Assoc., Inc. v. Marina Restaurant, Inc., 394 S.E.2d 824 (N.C.App. 1990). 20. Hardwick, Cook & Co. v. 3379 Peachtree, Ltd.., 363 S.E.2d 31 (Ga.App. 1987). 21. Dillon-Malik, Inc. v. Wactor, 728 P.2d 671 (Ariz.App. 1986). 22. Bijan Designer v. St. Regis Sheraton, 536 N.Y.S.2d 951 (N.Y.Sup. 1989). 23. Infinity Broadcasting Corp. Of Illinois v. Prudential Ins, Co. Of America, 869 F.2d 1073 (7th Cir. Ill. 1989). 24. Perhaps not in New Jersey, but see Reste Realty Corp. v. Cooper, 251 A.2d 268 (N.J. 1969) 25. Radinsky v. Weaver, 460 P.2d 218 (Colo. 1969). 26. Goldman v. Alkek, 850 S.W.2d 568, 571 (Tex.Ct.App. -- Corpus Christi 1993). 27. West's Ann.Cal.Civ.Code 1927 and 3268. 28. Dave Herstein Co. v. Columbia Pictures Corp., 172 N.Y.S.2d 808 (N.Y. 1958). See also Balzano v. Lubin, 556 N.Y.S.2d 610 (N.Y.A.D. 1 Dept. 1990) citing Herstein with favor. 29. HTM Restaurants, Inc. v. Goldman, Sachs & Co., 797 S.W.2d 326 (Tex.App.-Houston [14 Dist] 1990). 30. Lee v. Placer Title Co., 33 Cal.Rptr.2d 572 (Cal.App. 3 Dist. 1995). 31. Hardwick, 363 S.E.2d 31. 32. See fn. 21. 33. Bijan Designer, 536 N.Y.S.2d 951, 955. 34. Infinity Broadcasting, 869 F.2d 1073, 1078. 35. Davidow v. Inwood North Professional Group - Phase I, 747 S.W.2d 373 (Tex. 1988). Copyright © 1997. Ira Meislik. All rights reserved. For more information about NJ Law on this subject contact Meislik & Levavy at meislik@meislik.com |