Shopping Center Needing Numerous Repairs Not in “Good Condition”

Facts: Two owners of a shopping center alleged that a tenant defaulted on the lease because she allowed the property to fall into a deteriorated condition. The tenant refused to relinquish the premises after the termination of the lease, and the owners were forced to file an “unlawful detainer action” to reclaim the property. The trial court ruled that the tenant had not broken the lease, because, according to it, the tenant had taken reasonable care of the shopping center. The owners appealed.

Decision: The appeals court reversed the trial court's ruling.

Reasoning: The appeals court based its decision on the plain language of the lease agreement, namely, the forfeiture clause, and the factual findings of the trial court. Under Tennessee law, an owner may terminate a lease and take possession of the property if the tenant fails to abide by the lease provisions. Under the forfeiture clause in this lease, the buildings and structures of the shopping center must be kept in good condition and repair and the tenant is responsible for ordinary wear and tear. Yet the trial court noted the following problems, all dealing with either a building or structure: (1) a broken wall at the back of Oakwood Antiques; (2) mold and/or mildew on the walls of the older portion of the shopping center building; (3) graffiti on the shopping center walls, and particularly on the back wall of Oakwood Antiques; (4) rust on the Family Dollar Sign; (5) missing ceiling tiles from the covered walkway around the older portion of the shopping center building; (6) burnt-out florescent tubes in the covered walkway; (7) a broken retaining wall; and (8) dented columns around the older portion of the shopping center building.

The appeals court stated that “it is inconsistent for the trial court to rule that the tenant kept the property in ‘reasonably good condition’ while at the same time demanding that a long list of repairs be completed within a set number of days.” In the appeals court's judgment, the condition of the property either “lives up to the covenants in the lease or it does not.” The fact that the trial court recognized that certain repairs needed to be made to the buildings and structures undermined the notion that those buildings and structures were in good condition. The appeals court pointed out that, while it was aware that the trial court was trying to reach an equitable solution between the owners and tenant, it was not allowed to rewrite the terms of the lease.

• Richmond v. Frazier, August 2009