What Is this Thing Called Quiet Enjoyment? (In the Context of Commercial Leases)
I doubt that most people reading this know what is really meant by the “covenant of quiet enjoyment.” Understandably so. Because quiet enjoyment is a common law concept, case law is the sole source of its definition. The definitions constructed in real property treatises come from case law. Even in civil code jurisdictions, where an implied covenant of quiet enjoyment in leases is imposed by statute, the definition of quiet enjoyment is found only in case law. The Restatement (Second) of Property tells where the law is going, not where it is.
Dealing with quiet enjoyment would be a lot easier if the concept was implicated and analyzed in only a small number of well reasoned opinions which were consistent both over time and from state to state. Alas, would that were the case. Anyone who has ever searched cases for a point and come up dry should remember the ancient Chinese proverb, “be careful what you wish for, you may get it.” Thousands of reported cases deal with the covenant of quiet enjoyment.
Defining the problem is not the sole challenge. The law varies greatly from state to state. Common law did not distinguish between residential and commercial leases, but modern law does. The law of quiet enjoyment is changing quickly in some jurisdictions, but not in others. The covenant of quiet enjoyment now means something different in deeds than it means in leases, (although some judges are having problems with the differences). Cases involving quiet enjoyment as an implied covenant vastly outnumber those dealing with it as an express covenant, but one can reasonably surmise that in most situations, the lease in suit did contain a quiet enjoyment provision. Most cases slur distinctions between concepts of constructive eviction and those of quiet enjoyment, probably because almost all tenant’s attorneys choose to plead both of them as defenses and as causes of action. Speaking of defenses, most claims of breach of the covenant of quiet enjoyment arise as a tenant’s defense against a rent action. In those cases, it frequently isn’t hard to discern that a scream of “breach of quiet enjoyment” is a screen for a more fundamental breakdown of the landlord-tenant relationship. Lastly, breach of the covenant of quiet enjoyment is a catchall claim when neither the tenant nor the court can find an express lease term that has been violated.
With this as background, we’ll now try to cut a path through the thicket and create a guide to understanding just what is meant by the “covenant of quiet enjoyment” and where that concept is going. It won’t be easy. Some states haven’t moved out of the nineteenth century and others are already in the twenty-first. Not all states now holding a “modern” view got there gradually. Some courts just got tired of the “old” law and took a leap forward. Therefore, it is critical to know where the law is going, because, in drafting leases and in resolving simmering disputes, yesterday’s ruling may not be today’s “law of the case.”
Over the term of a lease, there are times when a landlord may interfere with its tenant’s actual or hoped-for use of the leased premises. Not every one of these interferences will be found to be a breach of an express covenant in the lease. Nonetheless, the tenant’s ability to use and enjoy the premises may have been permanently and intentionally harmed by an act of the landlord or of someone for whose conduct the landlord is responsible. It is for such cases that the law implies a special covenant in every lease—the covenant of quiet enjoyment. This covenant exists even if the lease is silent on the subject. In fact, the presence of an express covenant of quiet enjoyment in a lease actually serves to limit, not expand, a tenant’s rights.
The covenant of quiet enjoyment means different things in different places, at different times, and in different settings. What’s worse, every court speaks as if everyone knows, or should know, which of these meanings is supposed to apply to the case at bar, a practice which makes for great difficulty in trying to write a clear, “user friendly” guide to the subject. What is more, application of the covenant depends on time and place—time, because the coverage of the covenant is expanding with the modernization of real property law; and place, because some jurisdictions are still years and even decades behind this trend.
Nothing can illustrate this point better than a comparison of two rulings from 1995, when Ohio and New Hampshire looked at the same problem and came to very different conclusions. The Ohio court wrote:
Moreover, under the law, ‘a covenant of quiet enjoyment is [only] an assurance against a defective title * * *. It goes to possession.’ [citations omitted] Thus, there is no breach of the covenant for quiet enjoyment unless there be actual constructive eviction of the lessee. [citations omitted].
* * *
Further, under the law of Ohio, a commercial landlord does not impliedly warrant that commercially leased premises would be suitable for a particular intended purpose. Thus the law in Ohio is harsh toward commercial tenants.
* * *
The law in Ohio in essence requires a commercial tenant to vacate the premises before becoming entitled to recover damages for breach of the covenants of quiet enjoyment and/or habitability, if any.(1)
At the same time that the Ohio courts had that to say, the courts in New Hampshire expressed the following thoughts:
The complexities, interconnectedness, and sheer density of modern society create many more ways in which a landlord or his agents may potentially interfere with a tenant’s use and enjoyment of leased premises. Even without rising to the level of a constructive eviction and requiring the tenant to vacate the premises, such interferences may deprive the tenant of expectations under the lease and reduce the value of the lease, requiring in fairness an award of compensatory damages. Moreover, under modern business conditions, there is ‘no reason why a lessee, after establishing itself on the leased premises, should be forced to await eviction by the lessor or surrender the premises, often at great loss, before claiming a breach of the covenant for interference with the use and possession of the premises’ that is not substantial enough to rise to the level of a total eviction. [citations omitted] Likewise, the landlord’s greater level of knowledge of and control over the leased premises and the surrounding property militates in favor of a more modern view of the covenant of quiet enjoyment than the trial court adopted.
* * *
We note, however, that our holding as to the definition of a covenant of quiet enjoyment effects a change in the common law in New Hampshire… .(2)
So, what does this teach us? The law on one side of the fence may be radically different from that on the other. But don’t despair, the fences are coming down.
Let’s Start Again
It is now universally agreed that breach of the covenant of quiet enjoyment involves an interference with possession of the premises by a landlord, persons under the landlord’s direction or paramount title holders, but not interferences by third parties.(3) This is because all jurisdictions at one time viewed leases as instruments of conveyance and not as contracts. Since the covenant of quiet enjoyment is present both in leases and in deeds and easements, courts are prone to further confuse the whole subject matter by failing to distinguish leasehold interests from fee and other real property interests. On the other hand, jurisdictions on leading edge of change have expanded the covenant to guard against interference with “use and enjoyment” of the leased premises.
Confused? That’s no surprise! “Interference with use and enjoyment,” a mantra frequently mouthed by judges and commentators, just doesn’t seem to help define the covenant of quiet enjoyment. After all, not all of the plethora of ways in which a landlord can interfere with its tenant’s use and enjoyment of the premises amount to a breach of the covenant of quiet enjoyment.
A Start Toward Reconciliation
Every definition of the covenant incorporates the concept that breach involves interference with a tenant’s rights. The key word is “interference,” a word which is susceptible to a number of definitions, all of which may create an actionable claim. Here’s a list of interferences starting at the most obvious and working toward the least: actual eviction; actual partial eviction; constructive eviction; partial constructive eviction; breach of the covenant of quiet enjoyment; and breach of an implied warranty of suitability. At one end, we see a clear and absolute deprivation of physical possession. At the other end of the range, interference with a tenant’s enjoyment or use of its premises may be tantamount to depriving a tenant of its physical possession.
Simply speaking, every unjustified eviction, actual or constructive, total or partial, is a breach of the covenant. On the other hand, not every breach of the covenant of quiet enjoyment will constitute an eviction in every jurisdiction.
Tenant’s Choice of Remedies
Why does this matter? It matters because it affects both the tenant’s choice of remedies and the route by which it travels to obtain those remedies.
Absent express lease language to the contrary, if a landlord wrongfully evicts its tenant, i.e. actually physically deprives its tenant of possession of the leased premises, the tenant no longer has use of the premises, no longer must pay rent, and has a cause of action for damages. If a landlord wrongfully deprives its tenant of physical possession of part of the leased premises, the same result follows. Sometimes, a landlord acts in such a way as to permanently and intentionally deprive its tenant of the beneficial use of the premises, or some part of the premises, or materially interferes with its tenant’s enjoyment of the leased premises. If such acts indicate an intention on the landlord’s part to permanently deprive its tenant of that use and enjoyment, its actions may be grounds for a claim of constructive eviction.
Not every interference with use and enjoyment amounts to the basis for constructive eviction. Trivial or temporary acts, although unwarranted, but not intended to be a permanent expulsion, do not amount to an eviction. The outcome depends on the materiality of the deprivation; if the deprivation is trifling or produces no inconvenience, it does not constitute an eviction.(4) Now, there’s the rub! For a tenant to claim constructive eviction, it must abandon the leased premises. No matter how great the disturbance, the tenant must leave by reason of the very interference that gave rise to the claim of a constructive eviction. Moreover, even in the case of a partial constructive eviction, the tenant must abandon the entire premises. Not only that, but the abandonment must take place within a reasonable time.
Try to understand the dilemma faced by a tenant. Imagine a tenant who thinks it is being substantially deprived of the core benefits of use and enjoyment for which it bargained when it signed its lease. Imagine, also, that by reason of an intentional act on the part of its landlord (or someone for whose acts the landlord is responsible), the tenant believes that its use and enjoyment have been taken away. It can’t find an express term of the lease that the landlord has violated. Therefore it must seek relief for a breach of some landlord’s obligation imposed by law. Based upon its analysis of the situation, it chooses to claim that it has been constructively evicted.
If the tenant can’t prove its claim, it is both out of the premises and still obligated to pay the rent (and possibly other damages as well). To claim constructive eviction, it must vacate the premises within a reasonable time. If it elects to stay in the premises, a tenant can not avoid its rent obligations. If a court believes that it has delayed its abandonment, it also loses. Its lease may limit its remedies by expressly prohibiting a claim of eviction. In essence, under the doctrine of constructive eviction, a tenant must take an all or nothing risk.
What is a tenant to do under those circumstances where it feels that it has been improperly treated but that the landlord’s acts neither rise to the level of a constructive eviction nor are a breach of the letter of the lease? Alternatively, what is a tenant to do if it wants to stay in the premises? In those circumstances, the answer is to affirm (continue) its lease and seek damages or equitable relief. That’s what the covenant of quiet enjoyment is for. It covers the general claim of interference with use and enjoyment where the language of the lease provides no basis for a more specific claim.
Definition By Example
Justice Stewart’s famous definition of pornography incorporating the concept—“[b]ut I know it when I see it”(5), provides a frame of reference for defining the covenant of quiet enjoyment. Here’s an example from Pennsylvania in 1915.(6) A tenant leased a building for use as a theater. The building was adjacent to adjoining property that the tenant used for storage, offices, and dressing rooms. Patrons sitting in the balcony and gallery of the theater entered through the adjacent building and used openings between the two building to get to their seats. The adjacent building housed the theater’s candy booth. The adjacent property was not owned by the landlord. The landlord unilaterally closed up all of the openings.
Apparently, nothing in the lease prohibited the closing of those openings nor did the lease promise access to the adjacent building. Therefore, the court determined that the landlord’s action did not constitute an entire or partial eviction from the leased premises because there was no covenant that the opening should remain open. The court, however, did rule that there exists an implied covenant of quiet enjoyment in commercial leases. What it said was that “any wrongful act of the landlord which results in interference of the tenant’s possession, in whole or in part, is an eviction for which the landlord is liable for damages to the tenant.”(7)
The court emphasized that the openings were part of the building when the building was leased as a theater. It noted that the openings connected the leased building with the adjacent building and that the adjacent building was intended, by the tenant, to be used as part of the theater. Obviously, closing the opening caused injury to the tenant. The court continued by opining that any change in those openings “to the detriment of the tenant was a violation of the tenant’s implied covenant for quiet enjoyment of the property. They were as much a part of the theater. and as useful and necessary to its operation, as the seats and stairway…. Had the landlord closed the doors used for entering the theater or the openings used as a means of exit… ,” no different result would have resulted.
More than eighty years ago, a Pennsylvania court found a remedy for a tenant that was neither physically deprived of possession nor constructively evicted in a traditional way. In fact, the court even pointed out that, in its state, “there is no implied warranty that the premises are fit for the purposes for which they are rented, but there is an implied covenant for the quiet enjoyment of the demised premises… .”(8)
Here are some other examples where there was neither a physical interference with a tenant’s possession nor breach of an express term of a lease. Notice the varying ways in which different courts treated each tenant’s claims:
● Missouri, 1996. A commercial tenant successfully brought an action for breach of the covenant of quiet enjoyment when another tenant of the landlord, but on a nearby property, obtained an injunction to bar the aggrieved tenant from operating a grocery store. The nearby tenant was the beneficiary of a restrictive covenant against competing grocery stores, imposed on the landlord’s other nearby properties. The use clause in the injured tenant’s lease permitted a grocery store as well as “all other uses not prohibited by law or local ordinance.” Even though the tenant could retain possession of the leased premises and use the store for other than a grocery, the court held that the covenant of quiet enjoyment was breached.(9)
● California, 1931. A tenant constructed a real estate office on leased property, but during the term of the lease, his landlord caused two buildings and a high fence to be constructed within inches of the tenant’s building. This blocked both the public’s view of the building and the tenant’s advertising signs. In effect, the tenant’s building was blocked in. A California court, in 1931, found a breach of the covenant of quiet enjoyment.(10)
● New York, 1994. A restaurant tenant complained that poor water quality and intermittent supply disruptions prevented it from successfully operating for its intended use. The court distinguished between the issues of water quality and water supply. With respect to quality, it ruled that the lease required the tenant to maintain the water supply equipment at the premises and therefore it was not “deprived of something to which he was entitled under or by virtue of the lease.” With respect to the occasional supply disruptions, the lease was silent. Determining that the defective pipe lie outside of the leased premises, but on the landlord’s land, the wrongful act of the landlord in failing to maintain a proper water supply constituted a breach of the covenant of quiet enjoyment. The landlord’s failure “substantially and materially deprived tenant of the beneficial use and enjoyment of the premises.” Presumably, had the water supply not been critical for operation of a restaurant, no breach would have been found.(11)
● Washington, 1996. A fitness club alleged that the condition of the building’s common areas was so shabby that, in its tough business, customers passed it by and selected other clubs whose surroundings were in much better shape. Specifically, the dirty, threadbare, wavy, and torn carpets were alleged to be “so poor that it constitutes a safety and liability hazard.” The public corridors were dirty and gouged. The landscaping consisted of dead plants and the Landlord failed to properly maintain and clean decks and walkways. The court characterized the breaches as going to issues of suitability, but would not find a breach of the covenant of quiet enjoyment. In rejecting the tenant’s claim, it implied that had this been a residential lease, the result would have been different.(12)
● Pennsylvania, 1996. When first leased, a dry cleaning store was open and visible to the public. The landlord subsequently constructed a mini-mall, incorporating the dry cleaners as an interior store. As a result, tenant lost the use of its prominent display window and easy access to parking. No lease provision prohibited these alterations. These acts were found to be a substantial interference with “the tenant’s anticipated use of
the premises and represent a breach of the covenant of quiet enjoyment.”(13)
● Wisconsin, 1987. An employee of the landlord, using a torch to cut protruding bolts, unintentionally started a fire that heavily damaged the tenant’s premises. Tenant’s fire insurer sought damages under the theory that the substantial damage deprived tenant of its premises and constituted a breach of Landlord’s covenant of quiet enjoyment. The lease did not provide for landlord’s indemnification of its tenant. The court held that an essential element of a breach of the covenant is that the alleged acts be intentional. Thus, relief was denied.(14)
● Tennessee, 1990. Landlord engaged a roofing contractor to repair a badly leaking roof. The contractor was incompetent and during the course of repairs, a great deal of water entered the premises. Tenant’s inventory and fixtures were badly damaged and its business was substantially interrupted. The court opined that the cause of the interference was the negligence of a properly selected contractor and therefore the landlord did not breach the leases’s express covenant of quiet enjoyment. If the independent contractor’s work necessarily would have interfered with tenant’s quiet enjoyment, it appears that a breach would have been declared. Since the roofer could have done its work without interfering with tenant’s enjoyment, but didn’t, the landlord is not liable.(15)
● Florida, 1958. Tenant rented a portion of the first floor of a building for use as a retail clothing store. Landlord’s substantial remodeling of upper floor space almost resulted in complete destruction of tenant’s clothing business. The court, feeling it unjust to require that tenant first have abandoned the premises, awarded damages for the breach of the covenant of quiet enjoyment. Landlord argued that the interference was caused by acts of an independent contractor. In rejecting this defense, the court found that there was no way that the alterations could have been done without harming the tenant and therefore, independent contractor or not, the landlord caused the damage.(16)
● Tennessee, 1989. After the parties failed to successfully negotiate a lease renewal, the landlord embarked on a pattern of making increasingly strident and assertive claims against its tenant. Ultimately, through counsel, Landlord falsely claimed that tenant was in breach of the expiring lease and demanded accelerated payment of rent and other charges. The court, citing 52 C.J.S. Landlord and Tenant, Sec. 458, concluded that landlord’s improper conduct in interfering with the beneficial enjoyment of the premises by threats of expulsion and a pattern of unreasonable demands constituted a breach of the covenant of quiet enjoyment.(17)
● Florida, 1987. A seller of patio furniture in a shopping center complained of loud music, screams, shouts, and yells coming from adjacent space leased to an exercise studio. Landlord acknowledged its obligation to remedy the situation, but did nothing. The noise was found to essentially deprive tenant of its beneficial enjoyment of the premises, resulting in a breach of the covenant of quiet enjoyment.(18)
● North Carolina, 1990. Landlord breached its lease obligations by failing to repair a badly leaking roof. Tenant, unwilling to rely on damages alone, left the premises claiming that landlord’s breach rendered the premises unfit for its use as a restaurant. Agreeing with the tenant, the court stated that the landlord’s “action constituted constructive eviction which automatically operated as a breach of the implied covenant of quiet enjoyment.”(19)
● Georgia, 1987. An accounting firm occupied premises in an office building that underwent extensive renovation. Landlord conceded that there was substantial disruption at the building. None the less, the accounting firm did not vacate its premises and continued it business during the renovation. Landlord showed that its construction was conducted in a manner designed to minimize disruption of its tenant’s businesses. No breach of the covenant was found.(20)
● Arizona, 1986. Tenant signed a lease with the acknowledged intent of operating a decorative rock landscaping business. No express warranty of this use was in the lease. After the business grew considerably, neighbors complained to the municipality about the way in which the premises were used. Investigation revealed that the property was not zoned for tenant’s use and tenant was barred from continuing its business. As a result, tenant claimed that landlord deprived it of its quiet enjoyment. The court disagreed, saying, “[t]he fact that a tenant’s enjoyment of the demised premises is interfered with in the exercise of police power, not due to any fault on the part of lessor, is not a breach of the lessor’s covenant of quiet enjoyment.”(21)
● New York, 1989. A luxury-quality mens’ store was located in part of the ground floor of an historic and elegant hotel. Before the extensive, hotel-closing renovation of the hotel, tenant’s clientele could enter the store from the street or through the hotel lobby. The lease contained an exculpatory clause relieving landlord of responsibility for interruptions of its tenant’s business resulting from the renovation activity. The lease also promised access from the premises to the hotel lobby, but the court felt that this was not a guaranty that the hotel lobby would be open to the public. While espousing that in the presence of the exculpatory clause, the landlord would be liable to its tenant if there also existed a breach of the covenant of quiet enjoyment, no breach was found, probably because the court believed that the tenant should have contemplated a possible renovation and contractually provided for its own protection.(22)
● Illinois, 1989. A radio broadcaster occupied premises in an office tower and had its antennae on the roof of the 41-story building. Its lease specifically limited its use to a radio broadcast facility. Landlord subsequently constructed an adjacent, 64-story building. A building of that height would interfere with the tenant’s sole permitted use and consequently its enjoyment of the premises. The court denied a claim that the landlord breached its covenant of quiet enjoyment, telling the tenant that it should have anticipated interference from possible nearby, taller buildings.(23)
It is clear from this very limited sampling of cases that a tenant takes a great risk in ceasing to pay rent or abandoning its premises in reliance upon a claim that its landlord has breached the covenant of quiet enjoyment. Every reported case is very fact-specific and differing courts have differing thresholds at which they will side with the tenant. Except in the most progressive states, tenants would be wise to stay on the premises and use the covenant as a sword rather than as a shield in defense of an eviction or collection action commenced by its landlord. In states that provide for a right of redemption, aggrieved tenants would be wise to retain sufficient funds for deposit with the court or for payment of the rent should a court decide against them. In other states, unless it is abundantly clear to an objective observer that a tenant will prevail, a smart tenant should continue to pay rent while filing an action for damages or appropriate injunctive relief against its landlord.
It would be disingenuous not to note that very many of the reported cases on the subject arise in a common context. A majority of cases are commenced by landlords as rent or eviction actions; the tenant’s claim of breach of the covenant is posed as a defense or counterclaim. Anyone reading a substantial volume of the cases will get the sense that the defense is often raised without a substantial basis. Raising the defense or counterclaim under these circumstances appears to undermine the credibility of those tenants that truly have a grievance against their landlords. Fortunately or unfortunately, depending upon whether you are a landlord or a tenant, the practice of using the covenant of quiet enjoyment as an all-purpose defense seems to make it difficult for a legitimate tenant’s claim to be recognized.
Express vs. Implied Covenant
If a covenant of quiet enjoyment is implied in every lease(24), why do leases almost always contain an express covenant? The answer, quite simply, is because landlords write the leases. A Colorado court has said that “[i]n the absence of an agreement to the contrary, there is an implied covenant of quiet enjoyment of leased premises and the tenant is entitled to possession of the premises to the exclusion of the landlord.”(25) The corollary of this is that the parties can agree to eliminate the implied covenant of quiet enjoyment. If parties can eliminate the covenant entirely, they can certainly limit it. If a lease contains an express covenant, the express clause governs and abrogates any implied covenant of quiet enjoyment.(26) The Restatement (Second) of Property 5.6 concurs that “[t]he parties to a lease may agree to increase or decrease what would otherwise be the obligations of the landlord with respect to the condition of the leased property and may agree to expand or contract what would otherwise be the remedies available to the tenant for the breach of those obligations, and those agreements are valid and binding on the parties to the lease unless they are unenforceable in whole or in part because they are unconscionable or against public policy.” Even where statutory, such as in California, the covenant of quiet enjoyment can be modified or waived by a commercial tenant.(27)
A common formulation of an express clause conditions the tenant’s quiet enjoyment on its payment of rent. In 1955, a New York tenant sought to claim that its landlord’s breach of the covenant of quiet enjoyment amounted to a partial constructive eviction. The alleged breach was related to removal of toilet facilities and demolition of an area that the tenant used as a storeroom and shipping area. A key question was whether the space in question was part of the tenant’s premises. The tenant never got to prove its claim because the court opined: “[o]rdinarily, whether this area was included in the original lease would present a triable issue of fact. It is immaterial in the present case, since plaintiff failed to perform the conditions precedent, i.e. the payment of rent.”(28) Another common formulation requires that the tenant observe all of the covenants, terms, and conditions of the lease before “enjoying” the premises. This language also serves to limit the applicability of the covenant of quiet enjoyment.
The extent of the covenant is not limited solely by clauses that speak directly of an express covenant of quiet enjoyment. All lease clauses are to be read together, especially those clauses that are inconsistent with the covenant. A typical situation is where a tenant’s quiet enjoyment is spoiled by reason of a foreclosing lender voiding its lease. A clearer landlord’s breach of the covenant of quiet enjoyment would be hard to find. Nonetheless, the following typical situation is illustrative of how one lease clause shields a landlord from a damage claim by its angry tenant.
A Texas case arose when a landlord failed to make its mortgage payments, its lender foreclosed and terminated the tenant’s lease. Even though this intentional act on the part of a landlord permanently deprived the tenant of its enjoyment of the premises, the tenant came up empty-handed. In the court’s reasoning, the implied covenant of quiet enjoyment was precluded by the express terms of the lease stating that the tenant accepted the lease subject to existing and future mortgages. Consequently, the tenant was left without a viable claim against the foreclosing lender or against its own landlord.(29)
Sometimes, the fact that an express or implied covenant of quiet enjoyment is overridden by a controlling lease clauses should be obvious, but is not. In a California case, the “default by landlord” lease clause contained the following sentence, “[i]n no event shall tenant have the right to terminate this lease as a result of landlord’s default and tenant’s remedy shall be limited to damages and/or an injunction.” By reason on its landlord’s breach of the covenant of quiet enjoyment, the tenant thought that it could leave the premises and stop paying rent. But the cited clause prohibited it from doing so. When the tenant ignored the clause, vacated the premises, and stopped paying rent, it, not landlord, was found to have breached the terms of the lease, and the tenant was faced with a damage claim by its landlord.(30)
There are other situations in which it is not always obvious that a particular lease provision serves to limit the covenant of quiet enjoyment. For example, a landlord may undertake extensive renovation of its property, and, in doing so, materially interfere with a particular tenant’s ability to use its premises. What might otherwise be a valid claim on the part of the tenant based upon a breach of its landlord’s covenant of quiet enjoyment, can be nullified by a lease clause expressly granting the landlord its right to undertake the major renovation.(31) In such a case, courts reconcile the express rights of the landlord with the implied rights of its tenant.
Accordingly, counsel for landlords and tenants alike should be alert to the limitations written into express covenant of quiet enjoyment clauses and the interplay of quiet enjoyment with all other express terms of a lease. Intelligent and careful drafting will result in each party enjoying the benefit of its bargain. In Bijan Designer(32), the court itself taught this lesson to the tenant and its counsel, to wit, “I therefore take the opportunity to note that especially where—as here—the value of the leasehold takes into account the presence of the landlord’s clientele, tenants are well advised to provide for the eventuality of temporary closing for renovation, or at least to specify some limits to the exclusionary clause concerning repairs.”(33) In a similar lesson taught by a federal court in Illinois, a radio broadcaster was told that if it wanted protection against its landlord building a taller building adjacent to the one in which the tenant leased its own space, it should have negotiated an express provision to that effect.(34)
The time to deal with the covenant of quiet enjoyment is when the lease is written. Failure to do so will invariably cause one party or the other to risk an unpleasant surprise. With the hazy boundaries that courts have drawn, the covenant of quiet enjoyment is relatively broad. Unlike lease covenants more precise in nature, such as those requiring a landlord to keep the roof in good condition and free of leaks or requiring a tenant to carry a specific minimum level of insurance, the covenant of quiet enjoyment speaks of “interference with enjoyment.” This concept is almost one of equity, allowing courts to work without strict guidelines in ascertaining whether or not to grant relief to an aggrieved tenant. A well thought out lease will limit the uncertainties of this state of affairs.
From the tenant’s standpoint, there is no substitute for due diligence and inclusion of self-help cures within a lease. A tenant would be wise to insist that the lease include items that should be part of the implied covenant of quiet enjoyment as express warranties within the lease. Both landlord and tenant should be cognizant that because of the difficulties of proving damages, it may be advisable to include lease provisions for calculating damages. Landlords should insist on notice of alleged breaches and an opportunity to cure lease infractions. Leaving a determination of each parties’ rights and remedies to a court is a foolish course to travel.
Real property law remains local law. Even though commerce, knowing little about jurisdictional lines, has brought about increased uniformity of result regardless of state boundaries, real property law is still the law of immovables. What happens in one state just doesn’t seem quickly to impact what happens in another. What is more, despite judicial and legislative changes in approach to commercial leases tend to lag well changes in other areas. Nonetheless, a trend is clear. The law is increasingly protecting the reasonable expectations of a tenant that its landlord should not interfere with the expected use of the leased premises. Courts at the leading edge of leasing law have already begun to find an “implied warranty of suitability” in commercial leases. In doing so, they are saying that a landlord promises its tenant that the leased premises are suitable for their intended commercial purposes. Intertwined with this forward-looking stand, is the related concept that a tenant’s obligation to pay rent and the landlord’s implied warranty are mutually dependent.(35) But until every jurisdiction gets to that point, tenants must protect themselves through thoughtful lease negotiation and drafting. Through careful lease drafting, Landlords, too, can limit their risk and exposure by making certain that they are not exposed to the vagaries of court imposed lease obligations.
1. Doll v. Rapp, 660 N.E.2d 542 (Ohio Mun. 1995).
2. Echo Consulting Services, Inc. v. North Conway Bank, 669 A.2d 227,232 (N.H. 1995).
3. Richard R. Powell, Powell on Real Property 16B-15,n13
4. 52 C.J.S. 447.
5. Jacobellis v. State of Ohio, 84 S.Ct. 1676, 1682 (1964) (J. Stewart, concurring opinion).
6. Kelly v. Miller, 94 A. 1055 (Pa. 1915).
7. Kelly, at 1056.
9. Shop ‘N Save Warehouse Foods, Inc. v. Soffer. 918 S.W.2d 851 (Mo.App.E.D. 1996).
10. James v. Haley, 297 P. 920 (Cal. 1931).
11. Hidden Ponds of Ontario, Inc. v. Hresent. 622 N.Y.S.2d 168 (N.Y.A.D. 4 Dept. 1994).
12. Sprincin King Street Partners v. Sound Conditioning. Club, 925 P.2d 217 (Wash.App.Div. 1 1996).
13. Pollock v. Morelli. 369 A.2d 458 (Pa.Super. 1976).
14. Wausau Underwriters Ins. Co. v. Dane County, 417 N.W.2d 914 (Wis.App. 1987).
15. Marshalls of Nashville, Tennessee. Inc. v. Harding Mall Associates, Ltd. 799 S.W. 239 (Tenn.App. 1990).
16. Carner v. Shapiro, 106 So.2d 87 (Fla.Dist.Ct.App. 1958).
17. Tenn-Tex Properties v. Brownell-Electro, Inc. 778 S.W.2d 423 (Tenn. 1989).
18. Barton v. Mitchell Co. 507 So.2d 148 (Fla.App. 4 Dist. 1987).
19. Marina Food Assoc. Inc. v. Marina Restaurant, Inc. 394 S.E.2d 824 (N.C.App. 1990).
20. Hardwick, Cook & Co. v. 3379 Peachtree, Ltd. 363 S.E.2d 31 (Ga.App. 1987).
21. Dillon-Malik, Inc. v. Wactor, 728 P.2d 671 (Ariz.App. 1986).
22. Bijan Designer v. St. Regis Sheraton, 536 N.Y.S.2d 951 (N.Y.Sup. 1989).
23. Infinity Broadcasting Corp. Of Illinois v. Prudential Ins, Co. Of America, 869 F.2d 1073 (7th Cir. Ill. 1989).
24. Perhaps not in New Jersey, but see Reste Realty Corp. v. Cooper, 251 A.2d 268 (N.J. 1969)
25. Radinsky v. Weaver, 460 P.2d 218 (Colo. 1969).
26. Goldman v. Alkek, 850 S.W.2d 568, 571 (Tex.Ct.App.—Corpus Christi 1993).
27. West’s Ann.Cal.Civ.Code 1927 and 3268.
28. Dave Herstein Co. v. Columbia Pictures Corp. 172 N.Y.S.2d 808 (N.Y. 1958). See also Balzano v. Lubin, 556 N.Y.S.2d 610 (N.Y.A.D. 1 Dept. 1990) citing Herstein with favor.
29. HTM Restaurants, Inc. v. Goldman, Sachs & Co. 797 S.W.2d 326 (Tex.App.-Houston [14 Dist] 1990).
30. Lee v. Placer Title Co. 33 Cal.Rptr.2d 572 (Cal.App. 3 Dist. 1995).
31. Hardwick, 363 S.E.2d 31.
32. See fn. 21.
33. Bijan Designer, 536 N.Y.S.2d 951, 955.
34. Infinity Broadcasting, 869 F.2d 1073, 1078.