Commercial Leases

Massachusetts High Court Reaffirms “Single Look Doctrine” For Evaluating Liquidated Damages Clause in Commercial Leases

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Last week the Supreme Judicial Court of Massachusetts (SJC) held that, despite defaulting only one month into its five-year lease, a commercial tenant is bound by a liquidated damages clause requiring a lump-sum payment of all rent due during the remainder of the lease term. As set forth in Cummings Properties, LLC v. Hines, Massachusetts Constable’s Office Inc. (MCO), entered into a five-year office lease with Cummings Properties, LLC (Cummings).  The defendant Hines, the founder and sole director of MCO, personally guaranteed MCO’s lease obligations, including full payment of rent. One month into the term, MCO lost an important business contract and failed to pay rent the following month. Cummings began eviction proceedings in the state District Court, and one year after MCO vacated the premises, Cummings entered into a four-year lease with a new tenant.

Cummings filed suit in Superior Court against Hines to enforce his obligations as guarantor of the lease. The lease contained a liquidated damages clause that provided the

In Self-Renewing Lease, Tenant Has Burden of Proving Timely Termination

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In a case of interest to commercial landlords and tenants, the Massachusetts Appeals Court recently ruled that where a commercial lease is self-renewing but can be terminated on six-months’ notice to the other side, the party seeking to terminate – in this case the tenant – has the burden of proving it timely exercised its right.

Patriot Power, LLC v. New Rounder, LLC is a classic “she said-she said” dispute.  The parties’ lease provided that it would automatically renew for successive terms of one year unless either party served on the other written notice of its intent not to renew at least six months before the expiration of the then-current term.  About two weeks before the six-month deadline, the tenant sent the landlord a Federal Express envelope containing documents the landlord had requested in connection with its refinancing of the property.  At trial, the tenant’s executive assistant testified that she had “no doubt at all” that, in addition to the refinancing documents,