Tenant entitled to terminate lease where LL required to pay RE taxes but fails to do so.

App. Div. 3d Dep't reverses ruling that RE tax payment obligation is not basis for termination of lease when breached.

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A commercial lease provided that the landlord was to pay real estate taxes. The provision was included in a section of the lease which listed the landlord's obligations under the lease. The lease also provided that upon breach by the landlord of any provision of the lease, the tenant was authorized to withhold payment of rent, give notice to the landlord of the breach, and, if the breach were not cured within the prescribed time, to terminate the lease. After landlord failed to pay the taxes for over a year, tenant gave notice of the breach and demanded cure. When the cure period passed without payment of the taxes by the landlord, the tenant gave notice of termination of the lease. Landlord brought an action for breach by tenant of the lease. Tenant counterclaimed. Cross motions for summary judgment were made. The trial court ruled that the provision requiring landlord to pay the taxes simply assigned that duty to the landlord, but did not form the basis for the tenant to terminate the lease. The court below granted landlord's motion for summary judgment and denied the tenant's motion. The Appellate Division, Third Department, reversed, holding that the lease plainly included the tax payment obligation among the obligations of landlord the breach of which would entitle the tenant to terminate the lease. Another case of "What the lease says is what it means."

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Published In: Civil Remedies Updates, General Business Updates, Commercial Real Estate Updates

Reference Info:Decision | State, 2nd Circuit, New York | United States