Many disputes over commercial leases arise when a tenant stops paying rent but continues to operate out of the space they leased.  If this happens, the landlord can terminate the lease because of nonpayment and start the process to evict the tenant.  In many cases, when the tenant receives notice that the landlord plans to terminate the lease, the tenant will either pay as much as they can afford to pay, in order to stop the landlord from terminating the lease; if the tenant truly cannot pay, they might move out of the leased space voluntarily.  Of course, nonpayment of rent by tenants can also be the source of legal disputes.  If you are a commercial landlord, and a tenant leasing a space on your property refuses to pay and refuses to leave, contact a Birmingham business litigation lawyer.

Early Termination of Lease: The Right Way to Do Things

Alabama case law holds that a commercial tenant may end their lease early if the tenant and the landlord sign an agreement that the tenant will vacate the premises by a certain date.  After that date, the landlord is free to lease the space to a new tenant, and the old tenant is no longer responsible for rent they would have had to pay if they had still been using the space.  The tenant’s freedom from the obligation to pay rent begins on the date that the tenant vacates the property, regardless of how long it takes the landlord to find a new tenant.

A Dispute Between an Independent Restaurant Owner and a Commercial Landlord

In 2011, a broker connected Dean Massey, the owner of Lunch Box Subs and Smoothies, to Carriage Towne, a shopping center in Mobile.  Massey signed a lease agreement that provided that Lunch Box would lease a space a Carriage Towne from June 2011 until June 2014 and that Massey would pay $2,400 per month in rent.  In August 2013, Carriage Towne notified Ronnie Johnson, a representative of the broker, that Lunch box had vacated the rented space.  Johnson met with Massey and informed him that if he signed an agreement to terminate the lease early and to grant Carriage Towne permission to lease it to a new tenant, Carriage Towne would not be able to seek payment from him for the rent from August 2013 until June 2014.  Massey refused to sign, although he did return the key to Johnson, and after that, he stopped responding to Johnson’s attempts to contact him.  Carriage Towne sued Massey, and the court ordered Massey to pay the unpaid rent through June 2014, plus interest, and also to pay Carriage Towne’s attorneys’ fees for the litigation.

Let Us Help You Today

Many small businesses cease to operate after less than three years, and the COVID-19 pandemic has only made it harder for small businesses to keep their doors open.  An Alabama business & corporate litigation attorney can help you avoid costly disputes in cases where a commercial tenant must end a lease agreement early.  Contact Cloud Willis & Ellis for help today.