Hispanic referee between arguing neighbors

Sometimes the facts of a case are just sad. A tenant recently came to see me because he was being evicted from the condo he was renting.  He was not going to contest the eviction.  There were only 30 days left on the lease any way and, one way or the other, he had to move.  He had found a new condo to rent, but when the new landlord did a background check, he found about the eviction and the circumstances surrounding it and denied the rental application.  Now, the tenant wanted some sort of revenge.

The circumstances leading up to the eviction stemmed from the complaints of a cantankerous neighbor. The neighbor was an elderly man who lived with his even older mother.  From the day the tenant and his fiancée moved into the condo, the neighbor had issues.  The mother accused the tenant and his fiancée of being drug dealers (she is a nurse and he is a medical technician and has an at home e-commerce business).  The neighbor began to call condo security and file noise complaints.  The first complaint was about 2 months after the tenant moved in.  The neighbor complained about “loud music” at 6:00 p.m. on a Saturday.  Security responded.  When they arrived, they could not hear any music, but asked the tenant to keep it down.  The next complaint was filed for loud talking on the balcony at night.  Security was again dispatched.  Several similar complaints were filed and, at least one time, the police were called.  The police found no disturbance and did not file a report.

However, because of the number of complaints, the condominium association determined that the tenant was in violation of condo rules and advised the landlord, the owner of the condo unit that it had to evict the tenant. If landlord failed to evict tenant, association would fine landlord.  Therefore, landlord filed the eviction.

Tenant asked me if he could sue the association for defamation. However, everything that the association would have told a potential landlord was true – there were numerous complaints against the tenant and an action to evict was pending.  It didn’t matter if the neighbor’s complaints were not true.  We turned our attention to the neighbor.  The neighbor’s harassment of the tenant was the direct cause of the eviction and the subsequent denial of the tenant’s denial of a new lease. Neighbor was the cause of all of tenant’s problems.  Was there anything that could be done for the tenant?  What damage had tenant suffered?

Tenant expressed that he only wanted his reputation back. The eviction was damaging to him and his fiancée.  We discussed whether we could get some letter from the neighbor explaining that his false accusations led to the eviction.  But what leverage did we have to get such a letter?  A lawsuit perhaps?  The theories were sparse:  tortious interference with contract and slander and defamation.  These would be costly to prosecute and very difficult to prove.  And worst of all, a “crazy” defendant is a dangerous defendant.  Moreover, it really is not a good idea to use the court system for this purpose – to extract an apology.  Unless the tenant was willing to go all in on a lawsuit, we couldn’t take the case.

Looking back, my advice would have been, had the tenant called me as the neighbor was harassing him, to fight the complaints with the association at the time that they were made. Set the record straight as quickly as possible.  Make sure that the security reports were thorough and accurate.  If this were done, the association would have had no grounds to force the landlord to evict and, as the neighbor continued to complain, the association would have eventually stopped listening.  Sadly, one cranky neighbor affected another person’s ability to occupy and enjoy one condo and to rent another.  Tenant should have fought back early and hard.

 

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Tenants don’t often spend a lot of time on the renewal option provisions of commercial leases during negotiations. Though these provisions are seem to be for the tenants’ benefit, many tenants are satisfied that the lease provides for the agreed upon option with out giving much thought as to what their choices will be at the end of the lease term.  I suppose this short term thinking comes from the fact that people generally don’t like change and to move your business is very unappealing and disruptive.  However, if a tenant is careful and able to get some favorable language in the renewal provisions, as the expiration of the initial term approaches, the tenant will have time to properly evaluate whether to extend the lease or to sign a lease for space at another property.

The first thing to watch for relating to the renewal option is the time to exercise the right. Landlords generally look for a short window to exercise, about a year prior to the end of the term.  The window itself should not be that important to tenant as long that tenant properly calendars the dates and begins to research options far enough in advance of the notice period to make an educated decision and complete negotiations with a new landlord or the current landlord.  However, tenants should strive to negotiate for the window to exercise the renewal option to be at least 6 months long.  The time to exercise the option is usually around a year prior to the end of the term and the window falls around the 1-year mark.

Rent during the renewal term is the next key point. Landlords don’t like to lock themselves in here. While rent during the initial term usually increases a fixed amount year to year or on fixed dates or intervals, landlords like to reset rent at the beginning of the renewal term.  Sometimes lease drafts have language saying that rent will be determined at the start of the renewal term.  Tenants should never agree to this clause.  That is a blank check for the landlord.  A more common clause is to reset rent a fair market value (FMV).  This could be a blank check as well if FMV is not carefully defined or capped.  There is no right answer as to the definition of FMV.  Sometimes appraisers or brokers’ professional opinions (BPO’s) are used.  Still, you need to define what geographical area, class of property, rent incentives and other factors can be included in the determination of FMV.  Many landlords put a floor on rent, i.e., rent at the beginning of the renewal term can not be lower than rent for the last year of the initial term.  Whenever a FMV provision is included, I try to place a cap on the reset.  Sometimes, I try to convince the landlord to move away from FMV and instead, change the first year renewal rent to the increase in CPI from the last year of the initial term.  You also need to look at rent for the remainder of the renewal term and make sure that the reset does not happen every year.  I have encountered this on more than 1 occasion.

CAM increases during renewals need to be addressed. The base year for CAM increases should be re-set to the 1st year of the renewal term.

Tenants should pay attention to the renewal option language in the lease prior to signing. Planning for the future should begin immediately.  A poorly drafted renewal option provision could limit a tenant’s choices years down the road.  Thinking ahead could give a tenant leverage.

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