Owner's Material Breach Is Incurable

Facts: An owner and tenant signed a lease for office space, whereby each party would perform renovations to the space to convert it from industrial to office space. The owner was to perform its renovations first. After the owner missed the deadline to turn the space over to the tenant with the completed renovations—a material breach—the tenant notified the owner that it planned to terminate the lease. The owner claimed that the tenant hadn’t complied with the lease provisions requiring the tenant to give the owner time to cure—that is, fix—the default before terminating the lease. It sued the tenant. The owner asked a court for a judgment in its favor without a trial.

Decision: An Illinois trial court denied the owner’s request.

Reasoning: While the lease did contain provisions outlining that the tenant needed to give the owner the opportunity to cure in case of a material breach, the court noted that the situation was different when a default was incapable of being cured. In this case, the tenant could terminate the lease despite not fully complying with the obligation to give the owner a cure period. The owner’s failure to complete the renovations as planned on time couldn’t be cured. “A non-breaching party [to a commercial lease], here, the tenant, need not comply with a contractual notice and cure provision when the material breach is incurable,” the appeals court concluded. 

• Peoria Partners, LLC v. Mill Group, Inc., December 2015