R.I. Superior Court Holds Commercial Landlord Waived Holdover Penalty Provision By Accepting Usual Rent Check

| Dec 4, 2013 | Firm News

The Rhode Island Superior Court has held that by unconditionally accepting the usual rent payment a commercial landlord has waived the provision in a lease providing for double the usual rent payments when a tenant remains in possession past the term of the lease.

Plaintiff leased commercial property to Defendant pursuant to a written agreement that include a provision that if the tenant “shall holdover possession after the termination of the initial term…the Base Rent for such period shall be (2) times the rent paid…at the expiration of the initial term, prorated for the time of such holdover.” The lease expired on November 30, 2009. Plaintiff sent Defendant an invoice for December rent in the usual amount . Defendant paid the invoice with a check that Plaintiff deposited without condition or reservation.

Several days later, Plaintiff’s counsel sent Defendant a letter stating Defendant was being treated as a holdover tenant pursuant to the penalty provision. Defendant’s lawyer responded that Defendant would vacate the premises by the end of December but it did not do so. In January 2010, Plaintiff initiated a “trespass and ejection” action seeking possession of the property and damages. Defendant vacated the property two days later except for a trailer that was not removed until January 28, 2010. The court held a bench trial.

At trial, Plaintiff produced testimony about how its billing and collection procedures were automated and that no one made any changes necessary to assess Defendant the holdover penalty for December or to treat the December rent payment differently. Its vice president testified that only she has the authority to agree to new tenancies and she did not agree to Defendant’s holdover tenancy. Defendant argued that by unconditionally accepting the December rent check in the usual amount Plaintiff had waived the holdover penalty.

The Court parsed the Rhode Island Supreme Court precedent on waiver. Waiver is the “voluntary, intentional relinquishment of a known right.” It can result from action or inaction. The party claiming waiver has the burden of proof and can establish waiver indirectly by facts and circumstances from which an intention to waive may be clearly inferred. Waiver can be implied where a person has pursued a course of action that sufficiently evidences an intention to waiver or which is inconsistent with any intention other than waiver. The Court determined that Plaintiff had impliedly waived the holdover penalty provision when it billed Defendant for the usual amount after the expiration of the usual term of the lease and then unconditionally deposited the check for that bill. The Court said Plaintiff’s attempt to remedy its acceptance through its lawyer’s subsequent letter was “too little, too late.” The Court did hold that Plaintiff was entitled to prorated rent through January 28, 2010 when the trailer was removed from the property.

Renaissance Development Corp. v. Airport Valet, Inc., K.D. 2011-1208, slip op., (R.I. Super. Dec. 2, 2013).

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