Tolerating Bad Habits can have Consequences
KM, Inc. v. Well Cleaners, Inc., 185 So. 3d 112 (La. App. 2 Circ. 2016).
Landlord and Tenant entered into a lease for commercial space in Louisiana. The Lease provided that rent was due on the 10th day of each month and that “failure strictly and promptly to enforce the conditions… shall not operate as a waiver… Lessor expressly reserves the right to always enforce payment of rent… regardless of any indulgences or extensions previously granted.” During the term, Tenant was frequently late with rent payments, which Landlord would then accept late without comment. One month, when rent was not paid on time, Landlord initiated an eviction procedure against Tenant asserting Tenant was in default under the Lease for failure to pay its rent in a timely manner. In defense, Tenant claimed that Landlord’s custom of accepting late payments without consequence to Tenant had established a waiver of Landlord’s right to strictly enforce the rent payment due date. On appeal, the court partially agreed with Tenant’s position, holding that because Landlord customarily had accepted late rental payments from Tenant without any protest, Landlord had waived its right to evict Tenant for late payment, unless Landlord first provided Tenant with notice that Landlord would require strict compliance on the payment date with respect to future rent payments. As a result, Tenant prevailed and was not evicted.
Editor’s Note: Legal Corner contains case summaries and analysis of recent court decisions that impact commercial leasing and lease administration. These summaries focus on the leasing issues covered in each case and do not include detailed discussions or analysis of the procedural and peripheral issues in the cases. Note that these cases were included in the Legal Update materials from the 2017 NRTA Expanding Knowledge conference in New Orleans.