Thump, Thump, Thump – Are You Enjoying The Quiet?


It’s been more than five years since we published a blog posting focusing on quiet enjoyment. It began with: “Ruminations doubts that most readers know what is really meant by the ‘covenant of quiet enjoyment.’” That doubt persists. [To see it for the first time or once again, as the case may be, click: HERE.]

[Today’s posting is a long one. You may want to brew a cup of coffee before you begin.]

One month ago, a New York court issued a decision whose central feature was “quiet enjoyment” and its blood relative, “constructive eviction.” The facts described won’t be strange to many readers. The core problem arose out of a conflict between the nature of the businesses conducted (or to be conducted) by neighboring tenants. In this particular case, a tenant intended to operate a cancer treatment center in the subbasement of an office building. Just above that space was a gymnasium-focused health club. The cancer center planned to use precision machines to locate a patient’s treatment and then to focus a pinpoint radio wave at the patient’s tumors. One of the activities in the gymnasium just above the cancer center involved dropping weights weighing up to 200 pounds on the floor. That floor served as the cancer center’s ceiling. The resulting noise would have been annoying to the tenant below; the vibrations would have made precision pinpointing of the radiation impossible.

The cancer center signed its lease in October of 2011. With extensions, the lease included a due diligence period that extended to January of 2013. In October of 2013, the lease was assigned to a successor, the one directly involved in the quiet enjoyment dispute.

In January of 2012, the gym signed its lease. That was within the due diligence period and before the assignee took over the cancer center’s lease. Both the original cancer center and the successor tenant were aware of the gym’s lease. So, even during the planning and permitting stages for the cancer center, it notified the landlord of its concerns and “stressed that [the landlord] had to take measures to abate the disturbances emanating from the Gym.” The cancer center received “repeated assurances” from its landlord that it would “investigate and abate the noxious noise and vibrations caused by” the gymnasium.

Now would be an appropriate time to reproduce some lease provisions from each of the two neighboring leases.

The cancer center’s lease included this provision promising it “quiet enjoyment”:

Landlord agrees that upon Tenant’s paying the rent and performing and observing the agreements and conditions on its part to be performed and observed hereunder, Tenant shall and may peaceably and quietly have, hold and enjoy the Demised Premises and all rights of Tenant hereunder during the term of this Lease.

Now, at first blush, one might think this was written for the tenant’s benefit, but it wasn’t. This is a landlord-favorable clause. That’s because the covenant of quiet enjoyment is implied in every lease. Basically, it protects a tenant’s ability to use and enjoy its premises against permanent and intentional harm caused by an act of the landlord or of someone for whose conduct the landlord is responsible. [It isn’t specifically tied to “noise.”] So, what the particular lease provision does is to condition an express promise of such protection on the “Tenant’s paying the rent and performing and observing the agreements and conditions on its part to be performed and observed” under the lease. Ruminations has urged tenants to reject such clauses.

As to the gymnasium’s lease, the parties understood that the gym’s activities could interfere with the cancer center’s use of the space below. To that end, that lease included this provision:

Tenant will be obligated to sound proof the ‘gym floor area’ of the Demised Premises at the Tenant’s sole cost.

a. Upon completion of the sound proof the tenant space below the Demised Premises will not exceed the sound levels normally associated with retail space.

b. If the [T]enant fails to properly sound proof the demised space the Landlord has the right to provide and install a sound proofing system that meets the above stated sound levels at the sole expense of the Tenant.

The court’s decision doesn’t exactly say so, but it would appear that the landlord never consulted with the cancer center as to what about a gymnasium could interfere with the center’s operation. That’s reflected in the gym’s lease’s sole focus on “noise.”

There was also the following self-help provision:

If Tenant shall default in the performance or observance of any agreement or condition in this lease contained on its part to be performed or observed, other than an obligation to pay money, and shall not cure such default within the applicable cure period … Landlord may, at its option … at any time thereafter cure such default for the account of Tenant … Landlord may cure any such default as aforesaid prior to the expiration of said thirty (30) days period, but after notice to Tenant, if the curing of such default prior to the expiration of said thirty (30) day period is reasonably necessary to protect the real estate or Landlord’s interest therein or to prevent injury or damage to persons or property.

Case law provides a landlord with an additional right of entry, but it “is limited, in part, to repairing a significant structural or design defect that is contrary to a specific statutory provision.” According to the court, however, “[c]omplaints about noise, though, do not constitute a significant structural or design defect.” Unexplained by the court was why an earlier lawsuit by the landlord against the gym was withdrawn. It alleged that the “background ambient noise in the subcellar far exceeded what was permissible under the Administrative Code of the City of New York …, and found that significant structural vibrations had caused pipes and anchors to dislodge from the subcellar slab.”

In December of 2012, the gym installed a commercially available noise control system on its floor. That did not solve the problem. So, it was agreed among all parties as follows:

The biggest issue for us right now is the noise … [n]oise from [the gym is] not currently acceptable. All parties agree that the noise will be abated to allow [the cancer center] a level of quiet enjoyment [at an estimated cost of $250,000 to install a raised floor]. [The parties] all agree that we will try less expensive options, including no weights thrown during treatment hours, before going to the raised floor. However, ultimately, [the cancer center] will need to have quiet enjoyment of its space during business hours, even if the floor must be built.

Despite this agreement, the nuisance continued. The basement and subbasement were condominium units (owned by the landlord) within the office building. Throughout 2013 and 2014, the building’s managing agent frequently complained about “shaking or falling lights, falling fireproofing material, and loosened or falling rods, hangers or sprinkler pipes from the vibrations.”

For some reason, however, the cancer center tenant stopped complaining after this agreement had been reached. Though the noise and vibration continued, it seemingly “backed off.” Whether this was in reliance on the agreement or because it was seeking to further assign its lease to another operator or even to the gymnasium, we don’t know. When a potential assignee dropped out and it looked like the gymnasium deal wasn’t going to take place, it expanded its search for an assignee. It was discouraged by the lack of interest and especially by a broker’s view that, given the noise and vibration, the space was most suitable for storage. Impliedly, that would call for a much lower rent than the cancer center was paying.

The cancer center then put its fit-up plans on hold and discharged its contractor. Notably, it stopped paying rent after January of 2015, whereupon in May the landlord obtained a default judgment of possession. [There was a dispute over whether the eviction complaint was proper, and that dispute continues, albeit in a different court.] In August of 2015, after being evicted, the cancer center sued its landlord. The complaint listed 15 counts. Central to the lawsuit, and central to today’s posting, was the tenant’s allegation that its landlord had breached the lease’s covenant of quiet enjoyment and that it had been constructively evicted.

As noted above, the covenant of quiet enjoyment and the doctrine of constructive eviction are closely related. Evidence of that appears in the court’s decision:

A cause of action for constructive eviction is “dismissible as duplicative of those for breach of the covenant of quiet enjoyment” when both claims are premised upon an active or constructive eviction…. Additionally, a constructive eviction claim is generally considered a defense to a nonpayment proceeding …. Because [the tenant’s] constructive eviction claim is predicated upon the same facts as the quiet enjoyment claim, the [constructive eviction] cause of action must be dismissed.

That’s not the only reason why the constructive eviction count was dismissed. Pay attention; this is key. “A party claiming constructive eviction must abandon the leased premises with reasonable promptness.” Here, the cancer center tenant had not abandoned its space before the warrant of eviction was issued. Further, it made no complaints about the alleged nuisance from mid-January 2013 until about January 2015, about two years later. “During this two-year period, [it] continued to pursue” its project. ”

This is a common reason why tenants with otherwise solid reasons to claim they have been constructively evicted lose in court. Afraid that they would lose on such a claim, they stay in their space thinking that making periodic complaints and then stopping its rent payments will get them their desired result. Doing so, i.e., remaining in the space, dooms a claim of constructive eviction.

Getting relief based on a landlord’s alleged breach of the covenant of quiet enjoyment presents the same problem in most jurisdictions. New York is typical of the vast majority of states. Under New York case law, “[t]o prevail on a cause of action for breach of the covenant of quiet enjoyment, a tenant must show an ouster, or if the eviction is constructive … an abandonment of the premises.”

Further, “[t]he tenant must also show that it performed all conditions precedent in its lease unless those conditions have been waived. … Where the tenant ceases to pay rent, a claim for breach of the quiet enjoyment provision in a lease cannot be maintained …, because the ‘failure to pay rent `constitutes an election of remedies.” In particular, under the cancer center’s lease, the tenant’s “right to quiet enjoyment was expressly conditioned upon its performance of all Lease obligations, including the payment of rent and additional rent.” Demonstrably, the cancer center stopped paying rent and for that reason, the tenant could claim no damages for the period after it stopped those payments. As for the period before it stopped making the payments, it was never physically expelled from its leased space or any part of that space. Thus, any claims for the period before rent was stopped were dismissed.

Even if New York law did not require the tenant to abandon the space, the cancer center would still have had difficulty in succeeding in its claims. After all, the center had not yet opened. In fact, no substantive construction had yet taken place. The tenant continued with its project “despite the disturbances emanating from the Gym. As such, the noise and vibrations originating from the Gym did not impede [the cancer center] from progressing with the Project and building out the Premises, and therefore, did not substantially interfere with [its] beneficial use and enjoyment of the Premises during its occupancy.”

Ruminations is uncomfortable with the concept that when a tenant and its landlord agree that the tenant cannot operate its business unless an ongoing barrier (in this case, the noise and vibrations) is eliminated, the tenant must still spend gobs of money and open for business before it can get relief. Yet, we accept this to be the law. Tenant-readers, you should accept the same. Even if you don’t, know full well that courts do.

This tenant knew or should have known that it needed a vibration-free space. We’ve been there. This kind of tenant knows that. Just as the landlord (inadequately) dealt with what it thought would be a problem placing a gym right above a cancer treatment center, the tenant should have anticipated such a possibility. It could even have sought to include a list of prohibited uses for the space above. It didn’t.

Instead, it tried to get relief somewhat retroactively. We don’t know what was in its mind when it stopped paying rent before abandoning its space. Almost certainly, it was seeking various solutions, including assigning its lease to the gym above. Perhaps it thought that stopping rent payments would force its landlord to do “something.” We also don’t know why it didn’t document its concerns during the two-year “quiet” period. It doesn’t appear that it got legal advice or, if it did, that it got effective advice. Prevailing on a claim of constructive eviction is like threading a needle. It can be done if the circumstances are right, but it takes skill. Lastly, though it appears that it had moved its administrative office and even had its landlord send rent bills to that new location, it never changed its address for notices under the lease. That’s an issue that will come up if and when it continues its challenge to the default judgment that ended its tenancy before it abandoned the leased space.

What’s the bottom line? That’s simple. If you think you have (or will have) a claim for constructive eviction or for a breach of the covenant of quiet enjoyment, immediately seek a lawyer who really, really knows these subjects. These are complicated legal concepts, really complicated. More importantly, as we have often written, you need to conceptualize what might happen in the future. Too often we spend much more time and effort in exchanging draft documents than in thinking, ahead of time, about what special concerns a particular lease needs to address. Pay a lot more now or a lot more later.

Was today’s posting too complicated or involved for you? Imagine what it would have looked like had we not “ignored” the other thirteen claims made by the cancer center or the claims made by the landlord against the gym and the gym’s counterclaims. If that doesn’t scare you off, then you might want to navigate the court’s decision yourself. If so, you can see it by clicking: HERE.


Waste Is Only Waste If We Waste It


Imagine you had a tenant for a free-standing building (say, one being used as a quick-service restaurant) who proceeded to alter that building without obtaining your consent as its lease required. To make it worse, the tenant’s alterations reduced the floor area of the building by 10%. Yet, the tenant is a good rent-payer and you don’t want to terminate its lease. Your lease might have anticipated such a situation by including the following:

Suit or suits for the recovery of the deficiency or damage or for any installment or installments of rent, additional rent or any other charge due under this Lease may be brought by Lessor at any time or, at Lessor’s election, from time to time, and nothing in this Lease shall be deemed to require Lessor to wait until the Term Expiration Date to bring suit.

It might have but, as we will see, it doesn’t. Using a December 12, 2019 California appellate court decision [that can be read by clicking: HERE], we’ll explain why that is the case. [Read more…]


Cross A State Line And Co-Tenancy Failure Remedies Can Become Valid/Invalid


In early 2015, we characterized a California court’s decision in a co-tenancy clause case as: “[A] California appellate court has found a typical lease provision to be an unenforceable penalty.”  There, a tenant’s lease gave it the right to take a rent reduction and, after a period of time (if the landlord did not replace the lost co-tenant), it could terminate the lease. The California court allowed the tenant’s lease termination but made the tenant pay full rent during what was supposed to be the reduced rent period. Basically, it agreed with the landlord by holding that the substantial loss from the lower rent constituted an unenforceable penalty. For those interested in our description of that case and implied criticism as well, click HERE to step back to February 2015. [Read more…]


It Might Be Negligence To Leave Out The Word Negligence (Unless It Isn’t)


Are there “magic words” or are there not? Once again, we feel compelled to warn readers that “we need to know what we are doing.” A lot of people in this “business” of ours cross over jurisdictional lines whether rightly or not. There is a lot of material out there about the ethics of doing so. That’s a reasonable concern to have, but there is a far less discussed, but more serious, problem. It is called malpractice. That term is not limited to attorneys. It isn’t even limited to professionals. It is hard enough to know the law in a single jurisdiction. Know the “law” in every jurisdiction (e.g., state) is, frankly speaking, impossible.

If we are going to “practice” in the real estate world, we need to practice well, not malpractice. “Mal” is a “combing form,” one that is added to words. It comes from the French “mal,” and that came from the Latin “male” which meant “badly.” [We sure hope the word is pronounced differently than is the gender.] The bottom line, however, is that “malpractice” is practicing in a faulty or improper or inadequate manner. No reader of this blog wants to come within a million miles of anything “mal” in her or his practice. So, we need to know that we don’t know the law everyplace. One example is how various jurisdictions view liability waivers. Today, we write only about one aspect of that question – whether to effectively be released from one’s own negligence, a waiver must expressly say that “negligence” is being waived or whether waiving “all” claims for damage really means “all,” including those claims arising out of negligence. [Read more…]


Pretext; Equity; Eviction; What Do You Think?


Today, we write about the use of pretext. We’ll explain. First, here’s a story from a recent California appellate court decision.

A tenant (residential, but for our purposes, that’s of little consequence) only sent its check to cover part of its monthly rent. Its landlord returned the “rent check without cashing it.” [Now, we will digress (surprise). The quoted words come from the decision itself. If you wonder what “without cashing it” adds to the facts, you are not alone. If you read the actual decision, which can be seen by clicking: HERE, you will be able to analyze the court’s writing abilities in greater detail. Likely, you’ll find more of the same as in: “without cashing it.”]

Consistent with California law, the landlord served a three-day notice on its tenant. The notice said that “there was ‘unpaid and delinquent rent’ of $507.61 for June 2107.” It also said that if the tenant didn’t pay the delinquent rent within three days, the landlord “does hereby elect to declare a forfeiture of the subject lease … and will institute legal proceedings for the lawful detainer … to recover possession of the premises ….” After what appears to be a week or so after the end of the 3- day period, the tenant sent its check for the full amount and also included a second check as early payment of July’s rent. By that time, the landlord had sued to evict its tenant.

In what was a surprise to us, there was a jury trial. The jury’s found that the tenant HAD paid the rent. Presumably (according to the appellate court) this was because the jury decided that the landlord had prevented the payment by returning the check. In response to an appeal by the landlord, the appellate court held that the jury had clearly erred. In its view, although the tenant had tendered a deficient rent payment, the landlord had not accepted the check and, consequently, the rent was, in fact, NOT paid. Under the relevant statute, if a tenant is in default in the payment of rent after a three-day notice is served, it may be evicted. [Read more…]


The Right To Use A Property (Itself) Might, Itself, Be “Tangible Property” (Read On)


Today’s blog posting will be a slight deviation from our mission to cover real property law and real property law-related issues. We don’t think so. We think its conclusion could be relevant outside of a pure insurance context. Even if some conclude otherwise, certainly today’s’ Ruminating will be of interest to a subset of readers, those who think they know a thing or two about insurance coverage, but would like to test whether what they know is correct. To those readers who are uninterested in how the sausage of insurance law is made, we concede that today’s posting looks like it belongs in an insurance law blog. Though that argument could be made, it hasn’t deterred us because we think the subject is interesting.

Generally, a Commercial General Liability (CGL) Insurance policy will not cover purely economic losses. But, a California court in October of 2018 decided that “generally” does not mean always. [Read more…]


My Tenant Ruined Its Premises, How Much Does It Owe Me?


So, the tenant, without the required permission, made significant changes to its space and failed to properly maintain the property as it was required to do. Further, as readers might expect, at the end of the lease’s term, it didn’t return the space to its landlord it the same condition as it was when the lease started. What damages might be available to the landlord?

For one, it can’t recover more than it lost. The underlying principle is that the landlord is entitled to the amount of money that would put it in the same position it would have been had its tenant not “misbehaved.” But, it isn’t open season on the tenant. The losses claimed must be shown to flow from the tenant’s breaches. And, in making that determination, courts look through the eyes of a “reasonable person” viewing proven facts.

There are two approaches to quantifying what a tenant should pay to put its landlord in the same financial position it would have been. They are either the amount by which the fair market value of the damaged property falls below the value of the same property without the damage caused by the tenant. The other is the amount it would take to repair or otherwise restore the property to the condition in which it should have been. [Read more…]


Who Should Write Settlement Agreements? The Courts?


Today’s Ruminations is triggered by a court decision that may not have reached the “correct” result. If that suspicion is correct, then why do we promulgate its holding? There’s a simple answer. Had more talent been employed in negotiating the agreement dissected by the court, there would have been no court involvement. There would also be a different blog posting today.

The facts appear to be somewhat simple. They might be simpler had the court shown more of the actual agreement in its written decision. Instead, it gave us its characterization. Normally, when courts do so, they do it in a way that tilts the “story” to support its decision. So, we’ll assume that the characterization is the strongest the court could write to support the outcome. Enough with the mystery – here’s the story.

A fitness center leased space. The lease was subsequently amended, at which time the tenant’s owner signed a personal guaranty. The document was denominated as a limited guaranty, but the only “limitation” was its dollar amount cap. Otherwise, it appears to have been what we call a “come heck or high water” obligation. [Some would give it a different, but similar nickname.] The guaranty expressly said that the guarantor’s liability was “co-extensive with that of” the tenant. [Read more…]