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Attorney Ben Proto - The Musings of a Mad Lawyer

Saturday, October 13, 2018

What Happens When a Tenant Breaches a Commercial Lease?

In Connecticut, it is not uncommon for tenants to breach their commercial leases. When this happens, commercial landlords have the following options:

  1. Terminate the tenant’s lease, start eviction proceedings, and file a lawsuit to recover damages; or
  2. File a lawsuit to enforce the terms of the lease.

Below is an overview of how each of these two options function in Connecticut.

Lease termination, eviction, and lawsuit

When a commercial landlord decides to take the first of the two options described above, he or she must bring two separate lawsuits: an eviction lawsuit and a lawsuit for damages. Following possession of the property, it may then be rented to a new tenant. In the lawsuit for damages, commercial landlords typically seek unpaid past rent and future rent for the balance of the lease term. However, the availability of damages for future rent often depends on whether the commercial landlord has attempted to secure a new tenant and, when a new tenant has been found, the amount of rent that the new tenant is paying.

Lawsuit to enforce lease terms

In contrast with the first option discussed above, when a commercial landlord sues to enforce the terms of a lease, the lease isn’t terminated and an eviction action isn’t commenced. Rather, the tenant is permitted to remain in the property, and the commercial landlord initiates an action to require the tenant to comply with the lease terms. If the breach of the contract involves unpaid rent, then the commercial landlord is usually entitled to recover the unpaid balance of the lease term whether the tenant remains at the property or not. When the tenant doesn’t remain at the property, the landlord isn’t required to attempt to find a new tenant. However, the tenant may be permitted to sublet the property in order to satisfy the terms of the lease. A tenant’s ability to sublet sometimes factors into a commercial landlord’s decision regarding lease termination. When a commercial landlord decides to terminate a lease, he or she maintains control over who takes over the property. However, when a breaching tenant is permitted to remain on the premises, the commercial landlord has less ability to reject prospective tenants. One way in which commercial landlords address this issue is by including sublet consent clauses in commercial leases, i.e., clauses that require landlord approval prior to the execution of subleases. However, even with a sublet consent clause, courts don’t allow consent to be unreasonably withheld.

Connecticut Legal Representation

Real estate transactions, whether residential or commercial, can be complicated, and it’s important to ensure that no details are overlooked during the process. At the Law Office of Benjamin S. Proto, Jr., our experienced Connecticut real estate professionals keep both buyers and sellers apprised of their rights and duties as they navigate the residential and commercial real estate transaction processes. Please contact us for a free consultation.

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