Ambiguous Lease Interpreted Against Drafter

Leases for commercial space can be drafted by the tenant or owner. If you're responsible for drafting a lease with a tenant for your shopping center or office building, make sure that the terms and conditions in the document are clear and unambiguous. An ambiguous lease can cause multiple problems, regardless of who drafted it. That's because disputes about unclear terms could land you and the tenant in court for a determination as to who is right. But the drafters of ambiguous leases usually have the disputed terms construed against them. That was the case for a Michigan office building owner.

There, an office tenant’s lease contained two conflicting provisions regarding the time frame in which the owner was required to fix damage to the tenant’s space. After a roof collapse led to flooding and damage that forced the tenant out of its space temporarily, the tenant—under one lease provision—demanded that the owner fix the damage within 30 days or allow the tenant to terminate its lease. The owner argued that a second lease provision gave it 90 days to fix the damage. The tenant moved out. The owner sued the tenant for breaching its lease. A trial court ruled in favor of the tenant. The owner appealed, but an appeals court upheld the decision of the trial court in favor of the tenant.

The appeals court agreed with the trial court that the lease was ambiguous—specifically, finding the provisions relied upon by the tenant and owner in support of their differing positions to conflict. Because the contract was ambiguous, it must be construed against the drafter, which, in this case, was the owner, the appeals court determined. Therefore, the tenant was entitled to terminate the lease when it could not occupy the premises again after 30 days [Westridge Office Center v. James E. Logan & Associates, June 2014].