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  MODIFICATION OF LEASE; REQUIREMENT OF WRITING

Competition Realty

LANDLORD/TENANT; MODIFICATION OF LEASE; REQUIREMENT OF WRITING: In Florida, under certain circumstances, written contracts can be modified by a subsequent oral agreement of the parties even though the written contract purports to prohibit such modification. For example, an oral modification may be enforced where otherwise a party would be a victim of fraud or where the subsequent conduct of the parties indicates the acceptance of the oral modification.

 


Patrick A. Randolph

Elmer F. Pierson Professorship and Professor of Law; B.A. (Yale University); J.D. (University of California, Berkeley)

Husky Rose, Inc. v. Allstate Insurance Company, 19 So.3d 1085 (Dist. Ct. of App. Florida, 4th Dist. 2009):

The parties’ original lease did not require the tenant to maintain property insurance. Their renewal lease did. The parties agreed orally that the landlord did not have to be added to the policy until the policy came up for renewal. About six weeks before the insurance policy came up for renewal, but after the new lease was in effect, the tenant's restaurant was destroyed by fire. The landlord received nothing from the tenant's insurance recovery, but did receive payment under its own policy.



The landlord sued the tenant and the tenant's owner, who had guaranteed the lease for breach of their lease arising out of the tenant's failure to name the landlord as an additional insured on its property insurance policy. The landlord assigned its claim for breach of contract to its own insurance company. The tenant counterclaimed for the landlord's failure to rebuild the leased premises after it was destroyed by the fire.

The landlord admitted that it had agreed to wait for the tenant's insurance policy to renew before being named as an insured. But it argued that the "anti-waiver provision" of the lease negated that agreement. In particular, it pointed to a section of the lease reading: "The waiver of Landlord of any breach of any term, condition, or covenant herein contained shall not be a waiver of such term, condition, covenant, or any subsequent breach of the same or any other term, condition, or covenant herein contained." The Court quickly dispensed with this argument, pointing out that this was not a provision prohibiting any waiver of contract terms, but actually served only to prevent the assertion of the defense of waiver where the landlord might have declared a default based upon a subsequent breach of the same condition.

The Court, on its own, looked to the lease's provision that prohibited oral agreements to modify its terms. It recognized that the agreement of the tenant and landlord "not to comply with the insurance provision until policy renewal constitute[d] an oral understanding which" would be inconsistent with the lease's "modifications in writing only" provision. In Florida, however, courts maintain the principle that "under certain circumstances, written contracts can be modified by a subsequent oral agreement of the parties even though the written contract purports to prohibit such modification." Some circumstances cited by the Court included: "(1) where it would be a fraud on a party to refuse to perform the oral modification, or (2) where the subsequent conduct of the parties indicates the acceptance of the oral modification." As a result, the matter had to be remanded to the lower court because the lower court had never gotten past summary judgment and therefore there was no finding of fact as to whether the "no oral amendments to the lease" provision applied.

Comment: The rule here appears to be consistent with the general rule established in New York, Pennstylvania, and other juriscitions. See Friedman on Leases, Randolph edition, at Sec. 32.1.1.

The reporter for this item was Ira Meislick of the New Jersey Bar.

Items reported here and in the ABA publications

are for general information purposes only and

should not be relied upon in the course of

representation or in the forming of decisions in

legal matters.




 
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