There is an implied warranty of suitability by the landlord in a commercial lease that the premises are suitable for their intended commercial purpose. This warranty means that at the inception of the lease there are no latent defects in the facilities that are vital to the use of the premises for their intended commercial purpose and that these essential facilities will remain in a suitable condition. If, however, the parties to a lease expressly agree that the tenant will repair certain defects, then the provisions of the lease will control.
Petitioner leased space from respondent for use as a medical office. After entering the premises, petitioner discovered a number of problems, including a leaking roof, pest and rodent infestation, and respondent's failure to pay electric bills. Petitioner moved out and stopped paying rent. Respondent sued to recover unpaid rent, and petitioner answered that respondent had breached an implied warranty that the leased premises were suitable for use as a medical office, thus excusing petitioner from further rent payments. The trial court entered judgment in defendant's favor, which was reversed by the court of appeals. The state supreme court reversed.
Was the lessee justified in refusing to pay rent because of the lessor's breach of its implied warranty of suitability of the premises?
Petitioner was not liable for unpaid rent. It held there was an implied warranty of suitability by respondent in the commercial lease that the premises were suitable for their intended commercial purpose. Moreover, petitioner's obligation to pay rent was mutually dependent on, not independent of, respondent's implied warranty, so breach by respondent excused further rent payments by petitioner.