SW Legal studies in Business

Damages for Hold-Over Tenant Is Market Value of Rental Property
Description

Appeals court held that when a tenant improperly stayed in commercial property beyond the expiration of a lease, the tenant owed the market value of the rental property as damages. Since there was no other evidence about the rental value, the tenant would pay an amount equal to the regular rent.

Topic Real and Personal Property
Key Words

Commercial Lease; Eviction; Damages

C A S E   S U M M A R Y
Facts

Downey leased commercial retail space to S&V Liquor under a lease to run for five years at a monthly rent of $3,333.33. S&V could renew for an additional five years if it gave Downey notice of intent to renew no later than 120 days prior to the expiration of the lease. When the lease was nearing an end, and S&V did not send notice of intent to renew, Downey sent a letter offering to renew the lease at a new rate of $9,167.67 per month plus other charges. S&V did not respond. Five days before the lease was to expire, S&V wrote that it intended to remain as a tenant for another six months. It would move to a new location at that time. Downey refused and sued S&V for damages of $9,167.67 per month during the six month hold over period, rather than the original lease rent being paid by S&V. The trial court awarded Downey monthly rent at the original rate for the hold over period. Downey appealed, contending it should have been awarded the higher lease rate as damages.

Decision

Affirmed. S&V never agreed to pay the higher lease rate. However, since it held over improperly, Downey was due damages based on the fair market rental value of the premises after the expiration of the lease. The measure of damages when a tenant unlawfully holds over, and no special damages are alleged, is the rental value of the premises during the time in question. The damages would be the existing lease rate absent evidence that another tenant was willing to pay a higher lease rate. Downey did not have another tenant ready to occupy the space at the same or higher lease rate.

Citation

Charles Downey Family Limited Partnership v. S&V Liquor, Inc., ---N.E.2d--- (2008 WL 344096, Ct. App., Ind., 2008)

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