Default by lessor: Overview, definition, and example
What is default by lessor?
Default by lessor refers to a situation where the party that owns a property (the lessor) fails to meet their obligations under a lease agreement. This could include failing to maintain the property, not providing the agreed-upon services, or not making necessary repairs as outlined in the lease. In some cases, it could also mean that the lessor has failed to honor the terms of the lease in other ways, such as not providing the leased property for use at the agreed-upon time or not adhering to payment terms.
In simpler terms, default by lessor is when the property owner doesn't fulfill their duties or breaks the lease agreement in some way.
Why is default by lessor important?
Default by lessor is important because it can impact the tenant's ability to use the leased property as expected. It may lead to inconvenience, financial loss, or even legal action if the lessor’s failure to meet their obligations affects the tenant’s business operations or living conditions. When a lessor defaults, tenants may have legal rights to terminate the lease, withhold rent, or seek damages for any losses suffered due to the default.
For SMB owners, understanding what constitutes default by lessor can help protect the business from situations where the leased property does not meet the terms of the lease, leading to unnecessary complications or expenses.
Understanding default by lessor through an example
Let’s say your business leases office space in a building, and the lease agreement specifies that the lessor must maintain the heating and cooling system. However, the system breaks down, and the lessor fails to repair it within the agreed time frame. As a result, your business suffers due to uncomfortable working conditions, affecting productivity. In this case, the lessor has defaulted by not fulfilling their obligation to maintain the property as stated in the lease agreement.
In this example, the business may have the right to seek damages, request a rent reduction, or even terminate the lease, depending on the terms of the agreement.
Example of a default by lessor clause
Here’s an example of what a default by lessor clause might look like in a lease agreement:
“In the event that the Lessor fails to perform any of its obligations under this Agreement, including but not limited to maintaining the premises, making necessary repairs, or providing essential services, the Lessee shall have the right to withhold rent or terminate this Agreement without penalty, provided the Lessor is given [X] days to cure the default.”
Conclusion
Default by lessor is a serious issue that can disrupt business operations, especially for tenants relying on a leased property for their activities. For SMB owners, it’s essential to understand what constitutes a lessor's default and what legal remedies may be available if the lessor fails to meet their obligations. By knowing your rights under the lease agreement, you can take the necessary steps to protect your business if the lessor does not fulfill their responsibilities.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.