480-634-8426

 

 

 

 

Baker Law Offices, Real Estate and Business Lawyers

Dave Baker: Nine-time Super Lawyers selectee and Certified Specialist in Real Estate Law

 

Alex Baker: Real estate transactions, litigation, tax liens and estate planning ... Super Lawyers Rising Stars honoree

 

 

Commercial Landlord/Tenant Law | March 2017

Commercial Lease Enforcement: When a Breach Is Not a Breach

A landlord must be wary of equitable relief and waiver defenses, which may provide relief to the tenant from an otherwise material breach of the lease.

In our series' first article ("Ensuring a Proper Breach Has Occurred"), we discussed the analysis necessary to determine whether a material breach of the lease has occurred. However, it is not necessarily the case that an otherwise material breach will constitute a material breach in every scenario, and thus the Loehmann’s[1] factors are not the end of the analysis. Rather, the landlord must also be wary of equitable relief and waiver defenses, which may provide relief to the tenant from an otherwise material breach of the lease.

It is well settled in Arizona that a Court has discretion to declare a breach non-material for equitable reasons in the face of fraud, accident or mistake.[2] For example, a failure to pay rent until only a few days after the due date, due to an administrative mistake, will often not be deemed a material breach on the basis of equitable relief.[3] Thus, the landlord must make a determination as to the cause of the breach, rather than assuming that equitable relief will not apply.

Additionally, the actions of the landlord in the face of the breach may operate as a waiver of the landlord’s right to declare such a breach as “material.” For example, if a landlord accepts a late payment from a tenant while possessing notice that such payment was late, and does not explicitly state at that time that such late payment is a material breach of the lease, then the landlord will have waived its right to declare a material breach based upon that late payment.[4] Accordingly, in face of a breach of the lease, the landlord must take care to ensure that its actions with respect to the tenant will not waive that breach, if the landlord wishes to pursue legal remedies as a result thereof.


[1] See Foundation Development Corporation v. Loehmann’s, Inc., 163 Ariz. 438, 788 P.2d 1189 (1990) (setting forth the factors to be considered in determining materiality of a commercial lease breach).

[2] Id.

[3] Id.

[4] Butterfield v. Duquesne Mining Co., 66 Ariz. 29, 182 P.2d 102 (1947).