If you are the landlord of commercial space, be extremely cautious when drafting your lease provisions with respect to repair and replacement of portions of the leased premises. Commercial tenants should also review their leases carefully to determine what they are responsible for. In order to avoid any potential disputes later, it is better to be clear upfront and delineate responsibilities in detail in a manner that is consistent with what both parties have bargained for.
Case in point: In Quincy Mall, Inc. v. Kerasotes Showplace Theatres, LLC, 903 N.E.2d 887 (Ill. App. Ct. 4th Dist., February 27, 2009), the commercial lease between the mall and the tenant, a theater, included a "general repair" clause with respect to the roof. Under the terms of that clause, the tenant was responsible for repairs to the roof. Eventually, the roof required replacement. When the mall failed to replace it in a timely manner, the theater informed the mall it would replace the roof and deduct the cost of the roof from its rent.
The court supported the tenant's position, because the lease did not contain a clear provision about roof replacement, only about roof repair. The lease stated only that the tenant was responsible for repairing the roof, not replacing it. Therefore the burden of replacing the roof remained with the landlord.
Bottom line -- When reviewing your commercial lease, make sure you understand exactly what your responsibilities are! When something breaks, you should know who needs to fix it.
Thursday, January 28, 2010
Thursday, January 21, 2010
Can a Tenant be Required to Obtain Insurance Against the Landlord's Negligence?
Sure, why not? A recent case, Clarendon American Insurance Company v. Prime Group Realty Services, Inc., Nos. 1 08 0791 and 1 08 1985 (Ill. App. Ct., 1st Dist.,March 26, 2009), specifically statest that if the landlord and tenant enter into a lease requiring the tenant to name the landlord as an additional insured, covering all losses, whether or not they occur as a result of the landlord's negligence, then the tenant must comply with the insurance provisions of the lease, or be in violation of the lease.
In the Clarendon case, the tenant argued that it was not fair for the tenant to have to procure and maintain insurance for the landlord's negligent acts. The court disagreed -- the terms of the lease were explicitly agreed to. Moreover, the court distinguished between insurance and indemnification. It is against public policy for a party to be indemnified for its own negligence. It is not, however, against public policy to have another party insure the negligent party against its own negligence.
When entering into any commercial lease, the insurance and indemnification provisions should be reviewed carefully and agreed to by all parties to prevent any misunderstandings, and hopefully, any litigation down the line!
In the Clarendon case, the tenant argued that it was not fair for the tenant to have to procure and maintain insurance for the landlord's negligent acts. The court disagreed -- the terms of the lease were explicitly agreed to. Moreover, the court distinguished between insurance and indemnification. It is against public policy for a party to be indemnified for its own negligence. It is not, however, against public policy to have another party insure the negligent party against its own negligence.
When entering into any commercial lease, the insurance and indemnification provisions should be reviewed carefully and agreed to by all parties to prevent any misunderstandings, and hopefully, any litigation down the line!
Wednesday, January 6, 2010
Landlords and Recent Amendments to the Illinois Human Rights Act
As most landlords know, they cannot and should not discriminate against tenants or prospective tenants based on age, race, religion, gender, color, or family status. Pursuant to a recent amendment to the Illinois Human Rights Act, a new protected class is being added to that list -- people protected by orders of protection. Note this new law specifically applies to people who are actually protected by the order of protection, not to people the order of protection has been obtained against.
A landlord, or, for that matter, a seller of real estate, cannot discriminate against a potential tenant or buyer solely because they have an outstanding order of protection, whether that order of protection was issued by an Illinois court or an out-of-state court. As a landlord, if you enter into any leases, make sure that there is nothing in the lease that could violate the Illinois Human Rights Act. Lease provisions need not be directly in violation of the Illinois Human Rights Act -- any lease provision that could lead to eviction due to the actions of others (i.e. the person who the order of protection has been obtained against), should be reviewed carefully to prevent alleged violation of the Illinois Human Rights Act.
While many landlords may never find out if their tenant is the beneficiary of an order of protection, landlords that do find out must not discriminate against a tenant or proposed tenant as a result.
A landlord, or, for that matter, a seller of real estate, cannot discriminate against a potential tenant or buyer solely because they have an outstanding order of protection, whether that order of protection was issued by an Illinois court or an out-of-state court. As a landlord, if you enter into any leases, make sure that there is nothing in the lease that could violate the Illinois Human Rights Act. Lease provisions need not be directly in violation of the Illinois Human Rights Act -- any lease provision that could lead to eviction due to the actions of others (i.e. the person who the order of protection has been obtained against), should be reviewed carefully to prevent alleged violation of the Illinois Human Rights Act.
While many landlords may never find out if their tenant is the beneficiary of an order of protection, landlords that do find out must not discriminate against a tenant or proposed tenant as a result.
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