An Illinois Landlord’s Commercial Lease Damages

In a typical commercial lease lawsuit, the tenant is long gone and possession is not in issue.  Usually, it’s a retail tenant whose business is suffering and who can’t pay the required rent.  Because of this, getting a possession order is often an afterthought as the landlord’s main focus is trying to recover damages from the defaulting tenant.

Commercial leases (lease between two business entities) are less scrutinized by courts than consumer/residential leases: the thinking being that two commercially sophisticated parties should be free to craft their own deals with minimal court oversight.

So, if the commercial lease is between two businesses and there is no fraud, compulsion or over-reaching, the lease terms should be enforced as written.

If a tenant skips out on a 10 year lease with 8 years left on a lease, the lessor could conceivably recover the remaining 8 years left on the lease – IF (big IF) the lease explicitly gives the lessor the right to accelerate damages.  However, the damages question becomes murky if the lease is silent on whether the non-breaching landlord can accelerate rental payments through the lease expiration date.

 If there’s no acceleration clause in a lease (and many leases don’t have them), the rule in Illinois is that recovery for breach of lease is limited to the amount due at trial as there is no obligation to pay rent until rent day. Miner v. Fashion Enterprises, Inc., 342 Ill.App.3d 405 (1st Dist. 2003). 

Also, a failure to pay rent when it accrues does not accelerate the unpaid rent in the absence of a provision in the lease to that effect. A landlord then has the option of (a) suing for rent installments as they come due, (b) suing for several accrued installments, or (c) suing for the entire amount at the end of the lease term. Id.

If a commercial lease contains a clear acceleration clause (lessor can immediately recover all rental payments flowing through the end of the lease), it will likely be enforced.  If it doesn’t, the landlord’s recovery at trial will likely be limited to the amounts due and owing on the trial date.  In such a case, if there is a lot of time left on the breached lease, the landlord can file successive motions to amend the judgment as each month’s rental becomes due and unpaid.

 

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PaulP

Litigation attorney at Fisher Kanaris, P.C. representing businesses and individuals in all types of commercial disputes.

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