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Breach of contract of property lease can lead to litigation

| Jun 3, 2014 | Business Contracts & Disputes |

In North Carolina and elsewhere business agreements for the rental of a business premises are very common transactions. Business leases are often more long-term than residential leases. A residential lease may typically extend for one year at a time, with renewal privileges at the expiration of each one-year period. Business leases, however, can commonly run for longer periods of three-to-five years per term, or even longer. There are many reasons why business arrangements like these often break down into breach of contract allegations by one or both sides.

One major cause of a breakdown is when the tenant falls behind in the rent payments. Other reasons may be a major system failure in the premises, such as a plumbing or heating breakdown. Indeed, the range of possible business disputes over leased business property is as broad as the imagination.

In one case in Pennsylvania, a landlord sued a local theater organization for breach of contract of a lease to the theater group of a property called the Boal Barn Playhouse. The State College Community Theatre Inc. (SCCT) had been renting the playhouse since 1959 as a performance stage and for storage. The complaint alleges that the group stopped putting on performances there in 2013. Rent was allegedly stopped in Aug. 2013.

The suit claims over $23,000 in back rent, and a claim for $18,480 for the theater company’s alleged share of over $37,000 of required repairs. Apparently, in 2013 there was a requirement of repairs before a certificate of occupancy could be issued by the code enforcement authority. That, however, seems to at least raise an issue of whether the landlord had breached the contract and allowed the premises to become unusable for the intended purposes.

The landlord seems to be inviting negotiations rather than further litigation, according to a statement by its attorney. The theater group is now performing in several other venues. However, its attorney also indicated it wants to put the business dispute behind them. These statements could indicate that the parties will hammer out a settlement of this asserted breach of contract case by negotiations instead of further adversarial litigation. In North Carolina and elsewhere, these matters often lead to a negotiated resolution.

Source: Centre Daily Times, “Boal Barn battles theater group over rent dispute“, Lori Falce, May 28, 2014

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