In the recent case of Bold MLP, LLC v. Smith, et al., the First District Court of Appeal in Florida decided an issue involving the interpretation of a property lease. The plaintiff purchased property located in Pensacola that was subject to a lease. Shortly after the plaintiff received the first rent payment as the new owner of the property, the relationship between the plaintiff and its tenants turned sour. The plaintiff moved to terminate the lease, which resulted in a lawsuit.
The trial court initially entered a declaratory judgment in favor of the tenants, finding that the lease was enforceable. The plaintiff appealed, asserting a number of arguments. One of its main arguments before the First District was that the trial court did not interpret the rent provision of the lease correctly. The lease agreement provided that the monthly rent will be $800 for the first year, $875 for the second year, and $950 for the third year. It also included a three-year renewal provision, which the tenants chose to exercise. Providing no reasoning behind this decision, the trial court concluded that the monthly rent for the renewal period would be fixed at $950 per month.
The plaintiff pointed to Florida precedent stating that "where the lease is silent on the issue of rent in the renewal, then there is not a binding agreement and meeting of the minds." Based on this, the plaintiff asked the appellate court to invalidate the entire lease agreement because it failed to provide a rental rate. This would allow the plaintiff to evict the tenants and to avoid the three-year renewal option.
Reviewing the entire lease agreement, the appellate court rejected the plaintiff's argument, pointing to language that said: "[e]ach subsequent year rent will increase 5%." The "5%" in the lease had been crossed out and initialed. The phrase "$75 2nd yr $875 3rd yr $950" was written next to the initials. Accordingly, the appellate court ruled that the lease called for a $75 increase in the monthly rent each year, consistent with the numbers provided for the initial three-year lease term.
Based on this finding, the appellate court did not invalidate the lease as the plaintiff asked and instead affirmed the lower court's finding with a modification. While the trial court concluded that rent must be $950 per month for the new three-year term, the appellate court ordered that the monthly rates be $1,025, $1,100, and $1,175 for the next three years, respectively.
Real estate disputes may be complicated, especially when complex contracts and rental agreements are involved. At Lusk, Drasites & Tolisano, we have provided knowledgeable and tenacious legal counsel to landlords and tenants throughout Southwest Florida, including in Naples, Cape Coral, and Fort Myers. Knowing how the court will likely interpret your real estate contract and the implications this could have for your ownership rights is critical. An intricate network of laws applies to contract interpretation, meaning the outcome of a lawsuit about the contract may not be as straightforward as it seems. Call us today at 1-800-283-7442 or contact us online and schedule your free consultation to learn about your legal rights and options.