Rescission of a Lease Agreement

Posted: September 19, 2016 By: De Novo Review Category: Litigation

Category: Landlord-Tenant

Subject: Rescission of a Lease Agreement

By: Marty

Can a tenant assert that a commercial lease agreement is void and subject to rescission when the tenant later discovers that a zoning ordinance precludes the tenant’s business on the premises but the tenant continues to occupy the premises anyway without payment of rent?

No. See Morris Investment Partnership v. Figueroa, 698 So. 2d 288 (Fla. 3d DCA 1997). In Morris, the landlord and tenant entered into a commercial lease agreement whereby the tenant would operate an automobile repair shop on the premises in the City of South Miami. Id. at 289. The tenant then applied for an occupational license and the City of South Miami denied the application because of a zoning rule requiring that businesses have a certain amount of off-street parking. Id. While the denial of the occupational license was challenged, the tenant continued to occupy the leased property and operate the business without the license. Id. Fifteen months later but before the expiration of the lease, the tenant moved out of the leased property. Id. The tenant did not pay rent for several months of occupancy, claiming that the landlord failed to bring the property in compliance with the zoning ordinance or otherwise challenge the denial of the license. Id. The landlord demanded the past-due rent. Id.

The appellate court reversed the trial court’s declaration that the lease was null and void because “the fact that the Tenant remained on the premises and enjoyed benefits under the lease is totally inconsistent with seeking rescission of the lease.” Id. Had the tenant chosen to move out of the premises, the tenant could have argued there was a constructive eviction because the City of South Miami did not grant an occupational license; however, the tenant did not choose that course. Id. Instead, the tenant stayed in the leased premises and carried on its business, ostensibly under the authority of the written lease. Id. As a result, the landlord was entitled to collect past-due rent. Id. at 291.

Within the context of other contracts, the Florida Supreme Court has found that rescission is highly disfavored by the courts especially when one of the parties reaps benefits under that contract. Rood Co., Inc. v. Bd. Of Public Instruction of Dade County, 102 So. 2d 139 (1958); see also Luraline Products Corp. v. Architectural Lighting, Inc., 207 So. 2d 502 (Fla. 3d DCA 1968)(finding that a party waived the right to disavow an agreement by accepting its benefits and stating: “the principle that one who wishes to rescind a contract must do so within a reasonable time so that the parties may, so near as is possible, be restored to their original rights has been often recognized in Florida”); Steinberg v. Bay Terrace Apartment Hotel, Inc., 375 So. 2d 1089 (Fla. 3d DCA 1979)(affirming trial court’s denial of the counterclaim of rescission or cancellation of a contract because “the remedy of rescission is clearly not favored by the courts, particularly when the complaining party has failed to promptly deny the contract as binding upon him and failed to follow a course of conduct manifesting disavowal of it”); Aravanetes v. Gilbert, 143 So. 2d 825 (Fla. 3d DCA 1962)(holding that tenants were estopped from claiming the original lease and assignment were void and unenforceable for lack of witness signatures when it was undisputed that the appellants accepted the lease, took possession and occupancy of the property, sublet the property and made rental payments on a substantial portion of the lease); Lipkin v. Bonita Gardens Apartments, 122 So. 2d 623 (Fla. 3d DCA 1960)(finding that lease was enforceable despite the lack of a witness signature because the tenants accepted the lease from the lessor, took possession and occupancy of the apartment, and made rental payments for a portion of the lease term).

Tag Words: real estate, landlord, tenant, lease, lease agreement, rescission, cancellation, estoppel, contract

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