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  1. #1
    Join Date
    Sep 2016
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    13,916

    Default Can a Landlord Lease to a New Tenant While Obligated to an Existing Tenant

    A commercial landlord in Virginia was unable to meet the requirements of a lease agreement with a tenant. Specifically, the lease called for the landlord to do a build-out with a hood system for a commercial kitchen, but was unable to install the hood. The landlord sent the tenant a termination agreement, but the tenant has not signed the agreement.

    The tenant has learned that the landlord has leased the premises to another tenant, even though there remains in effect the lease with the original tenant. The new tenant is going to take advantage of the build-out that the landlord had already completed, meaning that the new tenant will get the advantage of the interior and kitchen layout as created by the original tenant. Can the landlord rent to a new tenant without being released by the original tenant?

  2. #2
    Join Date
    Sep 2005
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    Default Re: Can a Landlord Lease to a New Tenant While Obligated to an Existing Tenant

    Would it be better to first get the release? Certainly. But if there is no dispute between the landlord and the original tenant that the landlord would never be able to get the premises into move-in condition as defined by the lease, such that the tenant would never move in and would never stop paying rent, then there's no harm to the original tenant from another tenant's moving in.

    As for whether the original tenant has any right to compensation for the use of a design? Probably not, but the tenant can run the details past its business lawyer.

    The original tenant is more likely to have a possible cause of action for the delay in opening a business, due to the landlord's inability to keep up its end of the contract, and the need to find a different location in which to open its planned business. That's another issue for the tenant to discuss with its business lawyer, and it should take a copy of the lease with it to the consultation, along with information on any increased expense associated with finding and building out a comparable location, and whether there will be a delay in opening as compared to the date contemplated by the original lease agreement, due to the delay in opening.

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