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Except to the extent the parties to a lease validly agree otherwise, if a landlord fails to perform a valid promise contained in the lease to do, or to refrain from doing, something and as a consequence thereof, a tenant is deprived of a significant inducement to the making of the lease, and if the landlord does not perform his promise within a reasonable period of time after being requested to do so, the tenant may terminate the lease. This is based on a logical extension of the position taken by a significant number of judicial decisions which have applied the dependence of obligations doctrine in connection with the failure of the landlord to fulfill his obligations in regard to the condition of the leased property.
Defendant-tenant Leone Enterprises, Inc., a financial printing company, rented space in a multi-tenanted commercial building owned by the plaintiff landlord John Wesson. The lease ran for five years, commencing on March 31, 1988. The tenant first complained to the landlord about significant leaks in the roof in April 1991. The landlord agreed to fix the roof. The leaks later reappeared that spring, and the landlord hired a professional roofing contractor to make further repairs. In August 1991, the roof began leaking in some of the places previously repaired. After the landlord repaired the leaks, the tenant notified him of another leak in a different location; however, the particular leak was caused by a defective electrical conduit connected to the rooftop air conditioning unit, the maintenance of which was the tenant’s responsibility under the lease. The landlord had the roof inspected the next day by a professional roofer, who sealed the leak. In November 1991, the tenant notified the landlord that he would be vacating the premises. The landlord filed a complaint in the district court, which was later transferred to the Superior Court, alleging breach of contract and damage to the demised premises. The tenant filed counterclaims for constructive eviction and deceptive business practices under G. L. c. 93A, § 11. The judge found that the tenant had been constructively evicted from the premises by the landlord’s failure to adequately repair the roof and was therefore relieved of its obligation to pay rent. Alternatively, the judge held that, even if the tenant had not been constructively evicted, the tenant could have lawfully withheld the rent under the dependent covenants rule, where the landlord had failed to provide a “dry space,” a service “essential” to the lease. The landlord appealed, claiming the trial judge erred in concluding that there was sufficient evidence to support the constructive eviction claim, and in applying the "dependent covenants" rule to the parties' commercial lease.
Under the circumstances, was the tenant entitled to terminate the lease?
The Court held first noted that while the landlord's breach of his covenant to repair may have made the tenant's operation less convenient and more expensive, it did not rise to the level of a constructive eviction. However, the court, having adopted a rule of mutually dependent covenants, found that the landlord breached his covenant to maintain the roof by failing to adequately repair its chronic leaking; the breach directly interfered with the tenant's business by depriving it of a substantial benefit significant to the purpose of the lease; and, after adequate notice, the landlord's efforts to correct the problem were shoddy and unsuccessful. The tenant was entitled to terminate the lease and recover relocation costs in the amount determined by the judge.