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  1. #1
    Join Date
    Feb 2008
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    4

    Angry Sued By Landlord On A Commercial Lease

    I will try to keep this very short. My wife's Michigan business recently closed and moved out of the facility - with proper notice to LL. She was off-lease - it had expired months before so it was a month-to-month arrangement.

    Several months after closing we got a letter from LL's lawyer demanding almost $20,000 in unpaid rent.

    I questioned my wife and she admitted she hadn't been keeping up with the rent. I looked at the accounting software and found that she had been behind in rent for 16 months, rarely paying the full amount and one month not paying at all, most months paying a significantly reduced amount!

    This seemed crazy to me that this letter was the first official notice of any problem. Is it legitimate for LL to let this slide for 16 months and then expect the entire difference? Doesn't he have any obligation to limit his own damages?

    I refused to pay the amount requested and countered with allowing him to keep the $2300 security deposit which he still holds. Now he's suing.

    Obviously I am extremely angry at my wife (but that's another forum )

    Anyway, have we got any kind of argument that would stand up in court against this lawsuit?

  2. #2
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    Default Re: Sued By Landlord On A Commercial Lease

    Maybe he was telling your wife that she needed to catch up, and that he was cutting her a huge break. Even if not, it doesn't matter. It's a contract, she used the premises, and the statute of limitations is six years - the landlord can sue.

    Your most obvious defense would be that the business was the tenant, and that your wife did not personally guarantee the debts of the business. Of course, that only works if the business was incorporated (LLC, S Corp., C Corp., etc.), and if in fact she did not sign on as the tenant or personally guarantee the rent.

  3. #3
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    Feb 2008
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    Default Re: Sued By Landlord On A Commercial Lease

    The business is incorporated, but I don't recall if the lease was signed as individuals or as principles of the corporation - or if there was some clause preventing the corporation from shielding us from personal guarantee. I'll have to have a look at that.

    Of interest is that while we both were required to sign the original lease, only my wife is named in the suit. I don't know if that is significant or not.

  4. #4
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    Default Re: Sued By Landlord On A Commercial Lease

    I wouldn't suggest bringing that to the plaintiff's attention, particularly if you signed as a guarantor. It's possible that you were not named due to the fact that the lease had expired, although if some of the arrearage dates back to the lease term they could still pursue you for that amount if you guaranteed the lease.

  5. #5
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    Feb 2008
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    Default Re: Sued By Landlord On A Commercial Lease

    Is there any value to the argument that LL continued to perform for 16 months without formal action in response to reduced payments, failing to mitigate, so that he is not entitled to claim damages now?

    I suppose from what you said about the statute of limitations being six years the answer would be "no". He could have, theoretically, allowed this situation to go on for 6 years and claimed damages for the full amount? Doesn't the concept of "failure to mitigate" come into play at some point?

  6. #6
    Join Date
    Feb 2008
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    4

    Default Re: Sued By Landlord On A Commercial Lease

    Maybe "failure to mitigate" isn't quite the right concept. How about "waiver by acquiesence"?

    Did LL register a complaint via writing or through legal counsel? No. Did he lockout the site until the rent was brought up to date? No. Did he initiate eviction? No. Did he make any attempt to repossess? No. Did he advertise the site to find a new tenant? No. Did he put a For Lease sign in the window? No.

    On the contrary, did he continue to perform as landlord throughout the 16 month period of consistently late, insufficient and even occasional missing payments? Yes

    "The equitable defense of waiver by acquiescence "arises when a person knows he is entitled to enforce a right and neglects to do so for such a length of time that under the facts of the case the other party may fairly infer that he has waived or abandoned such right." McCurry, 117 N.M. at 568, 874 P.2d at 29. At its core, the defense of acquiescence is based on estoppel."

    Is this a valid concept in our case?

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