LANDLORD'S SELF-HELP

Having a comprehensive self-help right in the lease is essential for any landlord. The right lets you act in the tenant’s place if the tenant has failed to promptly comply with its lease obligation. The self-help right can protect the landlord’s building from damage if the tenant fails to do something required of it by the lease, such as repairing the plumbing. It can also assist the landlord in dealing with a tenant’s minor lease violation that may affect the day-to-day management of the building or center, such as its failure to move garbage to the proper place.

A tenant’s lease violation may cause catastrophic damage – and the landlord will be powerless to stop it or the landlord may be wasting time and money dragging a tenant to court over a minor lease violation instead of quickly and inefficiently taking care of itself.

The following are items to include in a landlord’s self-help clause that will strengthen its right to protect its building and avoid wasting time in court.

BENEFITS OF AIR-TIGHT SELF-HELP RIGHT. An air-tight self-help right in the lease will help the landlord in the following ways:

Motivate tenant to comply with lease provisions. A tenant is more likely to comply with a lease provision in the first place if it knows that the landlord has a self-help right. A tenant may not respond to a letter from the landlord saying that it had better dispose of its trash properly. But a tenant will often snap into action and correct a violation if the letter announces that the landlord will correct the violation on its behalf and charge tenant for landlord’s cost.

Quickly correct lease violations. If a tenant violates its lease, the landlord can step in and quickly correct the violation. In many instances, exercising the self-help right will prevent a situation from getting worse.

Make suing the tenant easier. Landlord should have an easier time suing the tenant to collect the money it spent enforcing the self-help right than landlord would suing tenant to force it to comply with the lease.

Trigger the right if tenant commits any lease violation. Some leases will allow the landlord to use the self-help right only if the tenant doesn’t pay rent or commits a “material” violation. The landlord should want the self-help right to apply even if the violation is minor. So make sure that the self-help right is triggered when the tenant fails to comply with any lease condition or commits any lease violation – not just a monetary or material one.

Don’t waive other rights. State in the lease that the self-help right is in addition to all of landlord’s other rights and remedies under the lease and make sure the landlord doesn’t waive its right to treat the tenant’s lease violation as a “default” if the tenant fails to correct the violation. If this is not clearly spelled out in the lease, a tenant may argue that once landlord exercised its self-help right, it can’t then exercise another right or remedy landlord has against it, such as terminating the lease or suing for damages.

Disavow obligation to exercise self-help right. State in the lease that landlord is not obligated to exercise its self-help right. Otherwise, the tenant may argue that landlord’s failure to step in to fix a broken window, for example, is a lease violation. And add that landlord won’t be responsible for any damages sustained by the tenant or any third party if it fails to exercise its self-help right.

It is a good idea to provide that landlord’s failure to exercise a self-help right won’t relieve the tenant of its lease obligation to indemnify landlord in connection with any claims brought against it that were the tenant’s fault. So, for example, if the landlord doesn’t fix the broken window on the tenant’s behalf and a tenant’s employee sues the landlord after being injured by a criminal climbing through the window, the tenant would have to indemnify the landlord.

Limit time landlord must wait to perform self-help. Typically, leases may make landlord wait as much as thirty days after its given the tenant notice of it’s lease violation before landlord can sue the tenant for defaulting on the lease. But if the landlord has a self-help right, it doesn’t have to wait that long after it’s given notice that landlord will exercise this right. The landlord should perform the self-help relatively quickly to avoid further damage to the property.

A better solution: give the tenant five days to correct the lease violation (after landlord notified it that landlord will exercise the self-help right). After that, landlord can perform the self-help. Also provide that in an emergency landlord can exercise a self-help right immediately – without any notice.

Get right to bill tenant for all costs. Get the right to bill the tenant for any money landlord paid or expenses incurred in connection with the self-help. This includes money landlord paid and expenses incurred for any property, material, labor or services landlord provided.

Landlord may also want to try to collect interest on this money. The interest should run from the day landlord paid the amount or incurred the expense until the date the tenant pays it. This is an incentive to get the tenant to repay landlord quickly.

Get right to bill monthly or immediately. State in the lease that landlord can bill the tenant either monthly or immediately – at landlord’s option. Otherwise, if the landlord doesn’t send the bill immediately, the tenant may argue that landlord waived its right to bill tenant for landlord’s self-help costs.

Require tenant to pay landlord promptly. Set a deadline for the tenant to repay landlord after it gets the bill.

Make self-help costs additional rent. Make sure the lease provides that the money tenant owes landlord is “additional rent”. That way, the landlord will have an easier time suing the tenant if it doesn’t pay by the deadline. Courts in most states offer quick procedures – often called “summary proceedings” – for landlords that sue for rent or additional rent. So landlords typically have a faster and easier time suing a tenant for additional rent than they do for trying to force a tenant to perform a lease obligation. Also the tenant’s failure to pay additional rent would be considered a material lease default. So the landlord can evict the tenant.

Get right to collect for insurance damage. One lease violation tenants often commit is failure to pay their insurance premium on time. If a tenant commits this lease violation and landlord steps in and pays the premium, the landlord will want to be able to recover more than the amount of the premium. The landlord will also want to recover any damages it incurs because of the lack of insurance. So have the self-help clause allow landlord to recover the amount of any uninsured loss or damages to the property during any period when the tenant didn’t pay the insurance premium.

Make sure the security deposit gives the landlord the right to make withdrawals from the security deposit to reimburse itself for any self-help costs if the tenant doesn’t pay the landlord.

The following is self-help lease language:

Landlord’s Self-Help Right

1. Self-Help Right. If Tenant shall default in the performance of any covenant, agreement, term, provision, or condition herein contained, Landlord, in addition to any other rights and remedies it has under this Lease and without thereby waiving such default, may perform the same for the account of and at the expense of the Tenant, but shall not be obligated to do so, without notice in a case of emergency and in any other case if such default continues after five (5) days from the date that Landlord gives written notice to Tenant of its intention to do so.

2. Bill Tenant for Self-Help Costs. Bills for any amounts paid by Landlord and all losses, costs, and expenses incurred by Landlord in connection with any such performance by Landlord pursuant to this Clause, including, without limitation, any amounts paid and costs and expenses incurred by Landlord for any property, material, labor or services provided, furnished, or rendered or caused to be provided, furnished or rendered, by Landlord to Tenant (together with interest at the prime rate from the date Landlord pays the amount or incurs the loss, cost, or expense until the date of full repayment by Tenant) may be sent by Landlord to Tenant monthly or immediately, at Landlord’s option, and shall be due and payable by Tenant to Landlord as additional rent within five (5) days after the same is sent to Tenant by Landlord.

3. Insurance Damages Included. In the proof of any losses that Landlord may claim against Tenant arising out of Tenant’s failure to maintain insurance, Landlord will not be limited to the amount of the unpaid insurance premium but rather Landlord will also be entitled to recover the amount of any uninsured loss (to the extent of any deficiency in the insurance required by the provisions of this Lease) damages, costs, and expenses of lawsuit (including attorneys’ fees) arising out of damage or destruction occurring during any period for which Tenant has failed to adequately provide such insurance as required.

4. No obligation. Any reservation of a right by Landlord to enter upon the Premises and to make or perform any repairs, alterations, or other work in, to or about the Premises, which, in the first instance, is Tenant’s obligation pursuant to the Lease, shall not be deemed to:

  1. Impose any obligation on the Landlord to do so;

  2. Render Landlord liable to Tenant or any third party for the failure to do so; or

  3. Relieve Tenant from any obligation to indemnify Landlord as otherwise provided elsewhere in the Lease.




Provided as an educational service by John Raymond Dunham, III, Esq..

This publication is intended to serve you. If you would like certain topics covered, or have any questions or comments, you are invited to contact Mr. Dunham at: 941.951.1800, Ext. 250, Facsimile: 941.366.1603, E-Mail: jrd@jrdlaw.com, Web site: www.jrdlaw.com or write him at LUTZ, BOBO, TELFAIR, DUNHAM & GABEL, Two North Tamiami Trail, SARASOTA, FLORIDA 34236.

This publication is designed to provide accurate and authoritative information in regard to the subject matter covered and report on issues and developments in the law. It is not intended as legal advice, and should not be relied upon without consulting an attorney.