Commercial lease cases have grown in Arsen Krekovic’s real estate litigation practice. The commercial tenant’s right to quiet enjoyment and when to seek legal counsel is discussed in today’s post. The uptick in commercial lease concerns and issues is primarily driven by redevelopment initiatives. The push through social change to increase housing is one driver of this activity. The shift is seen, especially in the transformations of malls. Tenants and landlords can get locked in conflict against each other, or they can, with proper legal counsel move forward in a collaborative and productive resolution to commercial lease issues that may arise. Read on for insights from Hoogbruin & Co’s real estate litigation expert, Arsen Krekovic.
Why demand for Vancouver commercial lease legal counsel increased in BC
Commercial lease litigation activity is on the rise is driven by redevelopment, particularly with malls due to:
- Redevelopment
- Renovation
- Residentialization
The changing social landscape and need for increased housing and other residential amenities has led to a shift. In addition, the tenancy of anchor stores of malls, with big box retailers (over time the former Sears, Eatons, Zellers and now The Bay, Walmart and others) is being replaced by residential spaces or smaller commercial buildings. Some are built overtop of current structures. As a result, the concept of quiet enjoyment in commercial leases has gained significant importance.
What is quiet enjoyment in relation to commercial leases?
Quiet enjoyment, unless explicitly contracted out or waived in the lease agreement, is a right protected under common law. In our justice system, this covenant ensures that tenants have the exclusive right to occupy the premises and enjoy it without disturbance. Common law says, that unless you consciously opt out of it, or contract out, you have the ‘right to quiet enjoyment.’
Some may mistakenly interpret it as mere noise control, but quiet enjoyment encompasses much more. In certain cases, the commercial lease may include an express clause or covenant defining the scope of quiet enjoyment. In such instances, the lease terms take precedence over the implied common law. The landlord could outline specific repairs or renovations they plan to undertake, limiting the tenant’s right to quiet enjoyment. However, it’s crucial for such agreements to be clear and specific.
The first line is to have an experienced commercial realtor who can advise on the contract. Some of these contracts can be very lengthy. The clauses but be specific and clear. If they are vague or sloppy the tenant can sue and essentially get around them in a court of law. Justice tends to favour the weaker or smaller.
“If you are the one writing the lease, and you are ambiguous or make a mistake, you can’t use that against your tenant. Your tenant, however, can use the mistake or ambiguity to their advantage against the landlord. You are deemed to have the upper hands and strength. And if you are the one writing the lease, it is a good reason for the landlord have a lawyer to put together the commercial lease and a good reason for the tenant to also have an experience commercial real estate lawyer reviewing the document, “says Krekovic.
Advice on seeking legal counsel and an example of a ruling in a commercial lease situation
As noted, to navigate the complexities of commercial leases, it is advisable to seek the expertise of an experienced commercial realtor who can provide valuable advice and prevent complications. These contracts can be lengthy and intricate, with landlords typically taking the lead in their creation. However, both the landlord and tenant should consider having an experienced commercial real estate lawyer review the document to ensure their rights are protected.
A relevant case study demonstrating the importance of quiet enjoyment in commercial leases is Bloor Street Diner Ltd. vs. Manufacturer’s Life Insurance Company. In this case, the tenant and landlord agreed to amend their lease to allow the landlord to embark on renovations. Over the eight months of redevelopment, the tenant, running a restaurant, endured noise and dust. Despite the interruption, the tenant ultimately benefited from the improved building and space, and their satisfaction was predominantly unchanged.
However, when the landlord planned to install a glass facade on the building, the renovation required, a hoarding wall. Once erected, it blocked the view of the restaurant from the sidewalk for an additional eight months. This obstruction impacted the restaurant’s business by reducing visibility and impeding foot traffic. The negative economic consequences extended beyond the renovation period, creating a long-term impact. Ultimately, the court ruled in favor of the tenant.
It is crucial for both landlords and tenants to carefully examine the fine print of commercial leases. Engaging the services of a competent realtor and a lawyer well-versed in contracts and commercial leases is strongly recommended. In case of disputes or impasses, a real estate litigation lawyer can provide guidance, resolving conflicts or navigating the court process.
Tenants should secure appropriate insurance coverage and seek professional advice from an experienced commercial lawyer before signing a lease. Simply being knowledgeable about one’s own business or having a reasonable understanding of the contract’s language is insufficient to navigate the intricacies of commercial leases. Exculpatory clauses, which excuse one party from responsibility, have legal implications. To protect their interests, tenants should consult their team: a realtor, insurance broker, or lawyer specializing in commercial leases.
Are conflicts and litigation inevitable in commercial real estate contracts?
Measures can be taken to prevent costly disputes. Effective communication is key. Landlords should proactively engage with tenants, discussing renovation plans and emphasizing the positive aspects. By providing regular updates, offering to put up signage to direct traffic to tenant businesses and offer compensatory measures like reduced lease payments during disruptions, landlords can wield constructive communication. Going beyond the strict confines of the law and what a lease agreement may allow either party to do, and focusing on building a mutually beneficial relationship can help avoid unnecessary litigation.
Are you a landlord or tenant involved in a commercial lease in British Columbia?
Understanding the concept of quiet enjoyment is vital to protecting your rights and interests. The complexities and potential pitfalls of commercial leases necessitate expert guidance. Consult with an experienced commercial real estate lawyer to ensure your contract is comprehensive, clear, and safeguards your rights.
If misunderstanding or ambiguity led to conflicts and an impasse requiring a real estate litigation specialist to resolve or move to court action, then reach out and contact, Arsen Krekovic and proceed with confidence and peace of mind in your commercial lease matter.
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