Real Estate Tip – Resolving Ambiguities Between Landlords and Tenants

Courts have many ways of deciding whether a lease means what the landlord says it means or what the tenant says it means. Here are three typical techniques and examples to help resolve ambiguities:

Decide against the drafter. In a landlord-drafted lease with both a 30-day and 90-day repair clause, the tenant prevailed in choosing the time period most favorable to it.

Assume sophisticated parties mean what they say. Where the parties had roughly equal bargaining power and used the word “abate,” the tenant prevailed in insisting that “abate the rent” meant “eliminate the rent” until the landlord paid an agreed construction allowance in full, rather than allowing the landlord to reduce the amount of the allowance by the amount of the unpaid rent.

Use the layman’s definition of undefined terms. A landlord prevailed when the tenant claimed that leasing to fast-food restaurants would violate a clause restricting the landlord from renting to “diner-type” restaurants because diners were viewed as serving a simple but varied menu in a space that “looks like a railroad car.”

To avoid ambiguity, be sure to use technical terms correctly and define ordinary words with greater precision. Hiring experienced lease drafting counsel can help minimize these issues from the start.

Today’s real estate tip is brought to you by Rick Smith, a LEED Accredited Professional and member of Bernstein Shur’s Real Estate Practice Group and Green Building Team. Stay tuned for more useful tips for real estate professionals.

For more information, contact Rick at rsmith@bernsteinshur.com or 603 623-8700 ext. 8829 or 207 774-1200.