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Rent acceleration clauses in commercial lease agreements

On Behalf of | Oct 3, 2016 | Commercial Real Estate |

If you read the fine print, you will notice that commercial lease agreements have many provisions to protect the best interests of the landlord. One example of such a provision is the rent acceleration clause. For more information about rent acceleration in commercial lease agreements, read below. 

What is rent acceleration?

The rent acceleration provision in a commercial lease agreement grants landlords the ability to ask for the whole balance of the unpaid rent owed by the tenant. The tenant will need to pay the entire balance in a single lump sum. For a landlord to ask for a rent acceleration, the tenant must be in default of the agreement.

Under Florida law, eviction does not preclude the ability of the landlord to ask for a rent acceleration under the lease’s terms. However, there must be no evidence of the landlord retaking possession of the property or of modified provisions of the commercial lease agreement.

In general, default is what triggers the acceleration and obligation of the tenant to cover the costs of future rent. However, how the rent acceleration occurs also depends on how the landlord writes the lease. In some cases, a specific default like the removal of fixtures or inventory, insolvency, or nonpayment of rent will trigger accelerated rent. However, some commercial lease agreements include a provision that any type of default can trigger a rent acceleration.

Possession of the property

If the landlord chooses to accelerate the rent of a tenant, the landlord cannot repossess the leased property until the end of the lease term. Therefore, if the landlord chooses to terminate the lease and repossess the property, he or she will not be able to request a rent acceleration.

In the event a landlord requests rent acceleration and rents the premises to another tenant, the rent paid by the new tenant will be paid to the original tenant if he or she already paid the amount for the accelerated rent.

Damages or Penalty

In general, the purpose of damages is to provide compensation to the injured party instead of punishing the individual responsible for the damages. If the purpose of damages appears to be a penalty, the damages will not be enforced. Courts may, and often do, view accelerated rent as damages when it comes to commercial lease agreements.

Not legal advice – contact a lawyer

Rent acceleration is a concept that often confuses tenants and landlords alike. And because circumstances, and commercial lease agreements, can vary widely, if you have questions about rent acceleration, don’t hesitate to speak to an experienced Florida real estate attorney.