Street Law School: Oklahoma Surface Damages Act

September 12th, 2017

When property is leased for exploration, the lessee has the right to go out and drill on that property. However, this exercise often causes damage to the surface of the land — damage to crops and land, pollution, damage caused by pipelines, access roads, etc. The issue of surface damages is addressed in the Oklahoma Surface Damages Act. While one individual may own the surface of property, another may own the land below the surface. This can rapidly become a complicated legal situation when surface damages occur.

Surface owners may become involved in a surface damages claim and require legal representation. Although the lessee can drill on the property they are leasing, they are ultimately responsible for compensating the surface owner for any damage done to the surface property. If you are a surface owner we can explain the legalities of the Oklahoma Surface Damages Act and how this law affects you.

§52-318.2.  Definitions.

For purposes of Sections 1 through 8 of this act:

1.  “Operator” means a mineral owner or lessee who is engaged in drilling or preparing to drill for oil or gas; and

2.  “Surface owner” means the owner or owners of record of the surface of the property on which the drilling operation is to occur.

§52-318.3.  Notice of intent to drill – Negotiating surface damages.
Before entering upon a site for oil or gas drilling, except in instances where there are non-state resident surface owners, non-state resident surface tenants, unknown heirs, imperfect titles, surface owners, or surface tenants whose whereabouts cannot be ascertained with reasonable diligence, the operator shall give to the surface owner a written notice of his intent to drill containing a designation of the proposed location and the approximate date that the operator proposes to commence drilling.

Such notice shall be given to the surface owner in any manner as provided for in paragraph 1 and paragraph 2 of subsection C of Section 2004 of Title 12 of the Oklahoma Statutes for the service by personal delivery or by mail of a summons in a civil action.  If the operator makes an affidavit that he has conducted a search with reasonable diligence and the whereabouts of the surface owner cannot be ascertained or such notice cannot be delivered, then constructive notice of the intent to drill may be given in the same manner as provided for the notice of proceedings to appoint appraisers.

Within five (5) days of the date of delivery or service of the notice of intent to drill, it shall be the duty of the operator and the surface owner to enter into good faith negotiations to determine the surface damages.

§52-318.4.  Undertakings which may be posted as damage deposit.
A.  Every operator doing business in this state shall file a corporate surety bond, letter of credit from a banking institution, cash, or a certificate of deposit with the Secretary of State in the sum of Twenty-five Thousand Dollars ($25,000.00) conditioned upon compliance with Sections 318.2 through 318.9 of this title for payment of any location damages due which the operator cannot otherwise pay.  The Secretary of State shall hold such corporate surety bond, letter of credit from a banking institution, cash or certificate of deposit for the benefit of the surface owners of this state and shall ensure that such security is in a form readily payable to a surface owner awarded damages in an action brought pursuant to this act.  Each corporate surety bond, letter of credit, cash, or certificate of deposit filed with the Secretary of State shall be accompanied by a filing fee of Ten Dollars ($10.00).

B.  The bonding company or banking institution shall file, for such fee as is provided for by law, a certificate that said bond or letter of credit is in effect or has been canceled, or that a claim has been made against it in the office of the court clerk in each county in which the operator is drilling or planning to drill.  Said bond or letter of credit must remain in full force and effect as long as the operator continues drilling operations in this state.  Each such filing shall be accompanied by a filing fee of Ten Dollars ($10.00).

C.  Upon deposit of the bond, letter of credit, cash, or certificate of deposit, the operator shall be permitted entry upon the property and shall be permitted to commence drilling of a well in accordance with the terms and conditions of any lease or other existing contractual or lawful right.

D.  If the damages agreed to by the parties or awarded by the court are greater than the bond, letter of credit, cash, or certificate of deposit posted, the operator shall pay the damages immediately or post an additional bond, letter of credit, cash, or certificate of deposit sufficient to cover the damages.  Said increase in bond, letter of credit, cash, or certificate of deposit shall comply with the requirements of this section.

§52-318.5.  Negotiating surface damages – Appraisers – Report and exceptions thereto – Jury trial.
A.  Prior to entering the site with heavy equipment, the operator shall negotiate with the surface owner for the payment of any damages which may be caused by the drilling operation.  If the parties agree, and a written contract is signed, the operator may enter the site to drill.  If agreement is not reached, or if the operator is not able to contact all parties, the operator shall petition the district court in the county in which the drilling site is located for appointment of appraisers to make recommendations to the parties and to the court concerning the amount of damages, if any.  Once the operator has petitioned for appointment of appraisers, the operator may enter the site to drill.

B.  Ten (10) days’ notice of the petition to appoint appraisers shall be given to the opposite party, either by personal service or by leaving a copy thereof at the party’s usual place of residence with some family member over fifteen (15) years of age, or, in the case of nonresidents, unknown heirs or other persons whose whereabouts cannot be ascertained, by publication in one issue of a newspaper qualified to publish legal notices in said county, as provided in Section 106 of Title 25 of the Oklahoma Statutes, said ten-day period to begin with the first publication.

C.  The operator shall select one appraiser, the surface owner shall select one appraiser, and the two selected appraisers shall select a third appraiser for appointment by the court, which such third appraiser shall be a state-certified general real estate appraiser and be in good standing with the Oklahoma Real Estate Appraisal Board.  Unless for good cause shown, additional time is allowed by the district court, the three (3) appraisers shall be selected within twenty (20) days of service of the notice of the petition to appoint appraisers or within twenty (20) days of the first date of publication of the notice as specified in subsection B of this section.  If either of the parties fails to appoint an appraiser or if the two appraisers cannot agree on the selection of the third appraiser within the required time period, the remaining required appraisers shall be selected by the district court upon application of either party of which at least one shall be a state-certified general real estate appraiser and be in good standing with the Oklahoma Real Estate Appraisal Board.  Before entering upon their duties, such appraisers shall take and subscribe an oath, before a notary public or some other person authorized to administer oaths, that they will perform their duties faithfully and impartially to the best of their ability.  They shall inspect the real property and consider the surface damages which the owner has sustained or will sustain by reason of entry upon the subject land and by reason of drilling or maintenance of oil or gas production on the subject tract of land.  The appraisers shall then file a written report within thirty (30) days of the date of their appointment with the clerk of the court.  The report shall set forth the quantity, boundaries and value of the property entered on or to be utilized in said oil or gas drilling, and the amount of surface damages done or to be done to the property.  The appraisers shall make a valuation and determine the amount of compensation to be paid by the operator to the surface owner and the manner in which the amount shall be paid.  Said appraisers shall then make a report of their proceedings to the court.  The compensation of the appraisers shall be fixed and determined by the court.  The operator and the surface owner shall share equally in the payment of the appraisers’ fees and court costs.

D.  Within ten (10) days after the report of the appraisers is filed, the clerk of the court shall forward to each attorney of record, each party, and interested party of record, a copy of the report of the appraisers and a notice stating the time limits for filing an exception or a demand for jury trial as provided for in this section.  The operator shall provide the clerk of the court with the names and last-known addresses of the parties to whom the notice and report shall be mailed, sufficient copies of the notice and report to be mailed, and pre-addressed, postage-paid envelopes.

1.  This notice shall be on a form prepared by the Administrative Director of the Courts, approved by the Oklahoma Supreme Court, and supplied to all district court clerks.

2.  If a party has been served by publication, the clerk shall forward a copy of the report of the appraisers and the notice of time limits for filing either an exception or a demand for jury trial to the last-known mailing address of each party, if any, and shall cause a copy of the notice of time limits to be published in one issue of a newspaper qualified to publish legal notices as provided in Section 106 of Title 25 of the Oklahoma Statutes.

3.  After issuing the notice provided herein, the clerk shall endorse on the notice form filed in the case the date that a copy of the report and the notice form was forwarded to each attorney of record, each party, and each interested party of record, or the date the notice was published.

E.  The time for filing an exception to the report or a demand for jury trial shall be calculated as commencing from the date the report of the appraisers is filed with the court.  Upon failure of the clerk to give notice within the time prescribed, the court, upon application by any interested party, may extend the time for filing an exception to the report or filing a demand for trial by jury for a reasonable period of time not less than twenty (20) days from the date the application is heard by the court.  Appraisers’ fees and court costs may be the subject of an exception, may be included in an action by the petitioner, and may be set and allowed by the court.

F.  The report of the appraisers may be reviewed by the court, upon written exceptions filed with the court by either party within thirty (30) days after the filing of the report.  After the hearing the court shall enter the appropriate order either by confirmation, rejection, modification, or order of a new appraisal for good cause shown.  Provided, that in the event a new appraisal is ordered, the operator shall have continuing right of entry subject to the continuance of the bond required herein.  Either party may, within sixty (60) days after the filing of such report, file with the clerk a written demand for a trial by jury, in which case the amount of damages shall be assessed by a jury.  The trial shall be conducted and judgment entered in the same manner as railroad condemnation actions tried in the court.  A copy of the final judgment shall be forwarded to the county assessor in the county or counties in which the property is located.  If the party demanding the jury trial does not recover a more favorable verdict than the assessment award of the appraisers, all court costs including reasonable attorney fees shall be assessed against the party.

§52-318.6.  Appeal of decision on exceptions to report of appraiser or verdict upon jury trial – Execution of instruments of conveyance.
Any aggrieved party may appeal from the decision of the court on exceptions to the report of the appraisers or the verdict rendered upon jury trial.  Such appeal shall not serve to delay the prosecution of the work on the premises in question if the award of the appraisers or jury has been deposited with the clerk for the use and benefit of the surface owner.  In case of review or appeal, a certified copy of the final order or judgment shall be transmitted by the clerk to the appropriate county clerk to be filed and recorded.

When an estate is being probated, or when a minor or incompetent person has a legal guardian or conservator, the administrator or executor of the estate, or guardian of the minor or of the incompetent person or the conservator, shall have the authority to execute all instruments of conveyance provided for in this act on behalf of the estate, or minor or incompetent person with no other proceedings than approval by the judge of the court of jurisdiction being endorsed on the instrument of conveyance.

§52-318.7.  Effect of act on existing contractual rights and contracts to establish correlative rights – Indian lands.
Nothing herein contained shall be construed to impair existing contractual rights nor shall it prohibit parties from contracting to establish correlative rights on the subject matter contained in this act.

This act shall not be applicable to nor affect in any way property held by an Indian whose interest is restricted against voluntary or involuntary alienation under the laws of the United States or property held by an Indian tribe or by the United States for any Indian tribe.

§52-318.8.  Effect of act on jurisdiction, authority and power of Corporation Commission.
Nothing in this act shall be construed as repealing or limiting the jurisdiction, authority and power of the Oklahoma Corporation Commission.

§52-318.9.  Violation of act – Damages.
Upon presentation of clear, cogent and convincing evidence that the operator willfully and knowingly entered upon the premises for the purpose of commencing the drilling of a well before giving notice of such entry or without the agreement of the surface owner, the court may, in a separate action, award treble damages.  The issue of noncompliance shall be a fact question, determinable without jury, and a de novo issue in the event of appeal.

Any operator who willfully and knowingly fails to keep posted the required bond or who fails to notify the surface owner, prior to entering, or fails to come to an agreement and does not ask the court for appraisers, shall pay, at the direction of the court, treble damages to the surface owner.

Damages collected pursuant to this act shall not preclude the surface owner from collecting any additional damages caused by the operator at a subsequent date.

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STREET LAW SCHOOL: My mortgage company is out of business and it never released its lien, now what?

September 3rd, 2017

Title Insurance and Closing Company settlement agents bear the bulk of responsibility when it comes down to closing a real estate transaction. After all, they are the ones who need to verify a clear title and facilitate resolution of any outstanding issues.

Unfortunately, this process is typically opaque, and can take a lot of time and resources, particularly when it comes to locating appropriate documentation to resolve outstanding mortgage liens. Even more difficult is knowing what to do when an original lender has disappeared or is now defunct. Luckily, there is a resource that can help smooth the difficult process of finding lenders who no longer exist.

Contact the FDIC

The Federal Deposit Insurance Corporation (FDIC) was designed to help protect consumers from failures of banking institutions. In the case when a mortgage lender has failed or closed down, the FDIC can issue a release of the mortgage lien, given it meets the following criteria:

  • The lending institution is in FDIC receivership
  • The mortgage was satisfied before the lender closed, or
  • The satisfying payment was made to the FDIC after the lender closed

In order to obtain a release from the FDIC, a request must be made in writing. It can take a month or more to get a response from the FDIC to a request for release, adding significant delays to a closing time line. Here is the FDIC link: https://www.fdic.gov/bank/individual/failed/lien/

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Victory on Appeal in U.S. Bank National vs. Smith

August 31st, 2017

I am pleased to announce that I have another appellate court victory. This time in an unreported case where I was hired only after the homeowner had already had judgment granted against him by the trial court in 2007. That’s right. In 2017, 10 years after the default judgment, the Oklahoma Court of Appeals reversed and remanded the case, giving no credence to US Bank’s statute of limitations argument under 12 O.S. § 1038.

The pro se defendants had a default judgment entered against them for their failure to file an Answer. The homeowners hired me in 2015 after they were served with a Notice of Sheriff’s Sale. I filed a petition to vacate the 2007 default judgment, which the trial court denied, but we won a reversal on appeal. The opinion contains a good discussion of § 1038, the statute of limitations to challenge judgments, and when the refusal to vacate a default judgment is an abuse of discretion.

Here is a link to the slip opinion: U.S. Bank vs. Smith.

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Street Law School: What are Your Rights as a (Residential) Landlord?

April 14th, 2015

Click on this link to read a good article on landlord rights from the Oklahoma Bar Association.

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Another Foreclosure Avoided

April 16th, 2014

10623056-detroit-foreclosure-preventionThis week I was able to obtain a dismissal of a foreclosure case filed in 2011 after my client successfully completed his loan modification. He just needed some time, and that is what I was able to obtain for him.

Good people sometimes need a second chance. Most foreclosures are a result of an unexpected life event, such as:

  • Death in the Family
  • Difficult and costly Divorce
  • Lost Job or had to Change Jobs
  • Health problems with Expensive Medical Bills

And never before has the expression “If I could just buy some time” meant so much. When facing foreclosure homeowners need time to discover their options, analyze their situation and implement an action plan. The most precious commodity is time…And it’s running out.  However, there are various ways that an attorney can get you the time you need.  Sometimes, as in a recent case, it is as simple as filing an Answer to the Petition and requiring the foreclosing lender to actually prove that it is the proper Plaintiff to bring the case.  If it isn’t a Dismissal Without Prejudice is appropriate.  Other times, as in another recent case, deficiencies in the Lender’s Motion for Summary Judgment can be identified, and the Judge may issue an Order denying the Lender’s Motion for Summary Judgment.

Homeowners’ options are changing because of the magnitude of the housing problem.  There is a chance to work things out with the lender if the homeowner fights for that chance. More banks are willing to work with borrowers today simply because they really can’t manage the huge backlog of homes which have already been lost to foreclosure. If the borrower can present a viable plan to repay the loan, the chances of retaining home ownership are pretty good.

The process can go fairly quickly. Here’s a basic rundown of the mortgage modification process and how long each step takes:

• Obtaining the modification package: Getting a loan modification package in the mail can take anywhere from a few days to a few weeks, depending on how long it takes to get a hold of the right loss mitigation manger, and of course, how many other modification requests being considered at the moment.  Lately, the attorneys for the foreclosing lenders have been willing to forward the applications directly to the attorney for the homeowner.  This can speed up the process.

• Submission of the loan modification package: It should take a week to fill it out and get it back to the lender with all the requested documents.

• Underwriting and internal auditing: Once the lender receives the modification package, they will check it over for mistakes, and then send it on for an in-depth review. Assuming that no questions arise regarding the paperwork, this should only take a few days.

• Assignment to a mitigation specialist: After being reviewed by the underwriters (which can take another week or two), the matter will be assigned to a loss mitigation specialist who is authorized to make the final decisions regarding the loan modification request.

• Decision and mitigation process: One of the longest parts of the process, this step can take several weeks as the loss mitigation specialist reviews the request and begins negotiating new loan terms. It may take a week or two or even a month or two to complete – that really depends on the specialist’s case load.

• Completion of the new loan: Once the modification request is approved, the lender will send a packet to fill out and sign within 3-5 business days to complete the modification.

Getting a loan modified can take several weeks to several months to complete. The key is being pro-active and patient, all at the same time.  A foreclosure defense lawyer is necessary to handle the foreclosure case, but homeowners don’t need to hire an expensive company to do their loan modification. On the contrary, doing the loan mod, or a short sale, yourself while your attorney defends the foreclosure case may lead to a better result and thousands of dollars saved.

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Victory on Appeal in BAC Home Loans Servicing vs. Graybill

December 13th, 2013

I am pleased to announce that I have another appellate court victory. This time in an unreported case where I was hired only after the homeowner had already had judgment granted against him by the trial court.

Here is a link to the slip opinion: BAC vs Graybill

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Victory on appeal in DELMAR BYRL GARRETT vs. CARLOTTA GORDON, 2013 OK CIV APP 96 (June 12, 2013).

December 5th, 2013

I am pleased to announce that I have a new reported case (that I won at trial and on appeal):

DELMAR BYRL GARRETT vs. CARLOTTA GORDON, 2013 OK CIV APP 96 (June 12, 2013).

Plaintiff/Appellant Delmar Garrett (Delmer) appeals the September 13, 2011, Journal Entry Order of the district court denying his Motion to Vacate Void Judgment, Vacate Partition Order, and Emergency Motion to Stay Sheriff’s Sale. The judgment sought to be vacated was entered in a divorce suit in which Delmer was named as a party. Because the judgment roll in the divorce proceeding shows that the district court had personal jurisdiction over Delmer at the time the judgment was entered, he is bound by the terms of that judgment. Therefore, the district court correctly denied Delmer’s motion to vacate and we affirm.

Link to Full Opinion.

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Huddleston Law Offices Provides Free Assistance to Homeowners Through Attorney General’s New ‘Resolution Oklahoma’ Program

September 20th, 2013

UPDATE

Phase II of Compensation from the Oklahoma Mortgage Settlement Fund now open Free legal help available through Resolution Oklahoma

OKLAHOMA CITY – Attorney General Scott Pruitt Monday announced the opening of Phase II of homeowner compensation from the Oklahoma Mortgage Settlement Fund. The deadline to apply is Dec. 31 for Oklahoma families who were harmed during the mortgage modification or foreclosure process with five mortgage servicers involved in the settlement. The new phase also extends the time frame for when harm occurred to include 2012. An updated application is available at www.oag.ok.gov or by calling (405) 521-2029.

“Fortunately for Oklahoma, we are the only state in a position to help our homeowners with direct meaningful relief,” Pruitt said. “By launching a Phase II for compensation, we can help those families who may have missed the deadline last year or who were not aware of the opportunity.” Oklahoma was the only state to craft its own agreement with Bank of America, Citigroup, JP Morgan Chase, GMAC and Wells Fargo, which allowed the Attorney General to provide direct compensation. In October, the AG’s Public Protection Unit, which manages the state settlement, mailed the first installment of checks to more than 100 Oklahomans. The amount awarded to Oklahoma families ranges from $5,000-$20,000 – a maximum that could be more than 20 times the money awarded under the federal settlement. The latest estimate shows residents in other states could receive as little as $840, and no direct payments have been made under the federal settlement.

“It is very exciting to be able to provide these Oklahoma families some meaningful relief for the harm caused,” Pruitt said. More than 700 Oklahomans applied for relief from the Oklahoma Mortgage Settlement Fund during Phase I, with an average payment so far of $11,173. Along with direct payments to residents from the Oklahoma Mortgage Settlement Fund, Oklahomans also qualify for portions of two federal settlements. The first federal settlement requires banks to work with homeowners on short sales, principle write-downs and mortgage modifications. So far, Oklahomans have received an average of $30,737 in mortgage assistance with this settlement.

A second federal settlement from the U.S. Department of Treasury’s Office of the Comptroller of the Currency is providing direct payments of $300 to homeowners who qualify. For Oklahomans who are still in their homes and need help to avoid foreclosure, the AG’s Office has created a program called Resolution Oklahoma that provides free legal assistance. Assistant attorneys general have found that homeowners have better outcomes during the mortgage and foreclosure process when they have legal representation. The first part of Resolution Oklahoma is in partnership with Legal Aid Services of Oklahoma to provide free legal assistance for lower income and older Oklahomans. The program is provided by a grant from the Oklahoma Mortgage Settlement Fund.

The second part of Resolution Oklahoma is for homeowners who do not qualify for income-based assistance. These homeowners can apply for a voucher worth up to $5,000 in legal services through the AG’s Office. The voucher application must be completed by homeowners and their attorneys of choice and submitted to the AG’s Public Protection Unit for approval. Once approved, the attorneys will provide the services needed and submit the invoices to the AG’s Office for payment after the work is complete.

All homeowners can apply for assistance through Resolution Oklahoma, no matter their mortgage company. Voucher applications are available online at www.oag.ok.gov, by e-mail at PublicProtection@oag.ok.gov or by calling (405) 521-2029.

To contact Legal Aid Services of Oklahoma, call (888) 534-5243 or go online to www.oklaw.org.

For more information on the Treasury federal settlement, call 1 (888) 952-9105 or go online to www.occ.gov/topics/consumer-protection/foreclosure-prevention/correcting-foreclosure-practices.html.

To access the main federal settlement, contact your mortgage servicer at one of the following numbers: Bank of America: (877) 488-7814 Citigroup: (866) 272-4749 GMAC: (800) 766-4622 JPMorgan Chase: (866) 372-6901 Wells Fargo: (800) 288-3212

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OKLAHOMA CITY – The Attorney General’s Office and Legal Aid Services of Oklahoma (“LASO”) are providing free legal help to homeowners who are facing mortgage issues or foreclosure, and Huddleston Law Offices has been retained by LASO to assist and consult with LASO staff and homeowners that call LASO.

The program – Resolution Oklahoma – is designed to help Oklahoma residents stay in their homes or seek the best outcome for their situations. The program is provided by a grant from the Attorney General’s Oklahoma Mortgage Settlement Fund.

The fund was created last year, following a settlement by the AG’s Office with five of the nation’s largest mortgage servicers. Mortgages do not need to be with one of the five servicers to apply for the Resolution Oklahoma program.

“We signed a separate Oklahoma Mortgage Settlement so we could craft solutions that were best for our state,” Attorney General Scott Pruitt said. “Throughout this process, we found homeowners fared better with the help of an attorney. Through Resolution Oklahoma, we will be able to provide this critical legal assistance to Oklahoma families.”

Oklahomans with lower incomes or seniors should first contact Legal Aid Services of Oklahoma to determine if they qualify for income-based assistance under Resolution Oklahoma. Homeowners who do not qualify for income-based need from LASO can then apply for a Voucher worth up to $5,000.00 in private attorney legal services through the AG’s Office under the Resolution Oklahoma program.

The voucher application must be completed by homeowners and their attorneys of choice and submitted to the AG’s Public Protection Unit for approval. Once approved, the attorneys will provide the services needed and submit the invoices to the AG’s Office for payment once the work is complete.

Voucher applications are available online at www.oag.ok.gov, by e-mail at PublicProtection@oag.ok.gov or right here: AG Financial Aid Application.

To contact Legal Aid Services of Oklahoma, call (888) 534-5243 or go online to www.oklaw.org.

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Victory On Appeal

April 19th, 2013

10623056-detroit-foreclosure-preventionWe were successful in having a summary judgment in favor of the bank reversed and remanded.  This decision will be helpful to persons defending against a purported successor trustee of a securitized trust where there is no new assignment of the note to the successor trustee.

Brian Huddleston

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My Tenant And I Have Agreed On The Major Deal Points For Our Commercial Lease, Now What?

February 5th, 2013

imagesWhen signing a commercial lease, it is essential to understand and agree to all of the provisions. The provisions in a commercial lease are usually designed to favor the landlord; however, a landlord may be willing to negotiate. An experienced real estate attorney should be consulted before entering a commercial lease. Here are a few essential terms that should be clearly understood prior to signing:

Term – A short-term lease provides a tenant with more flexibility for changing needs. The tenant may decide on a change of location or a space with more or less square footage. If a tenant is confident in the location they are choosing, it may be advantageous to negotiate a long-term lease. With a long-term lease, the tenant does not have to worry about the landlord renewing the lease and may receive a better rent payment or other concessions. An additional option is to negotiate a short-term lease with an option to extend or renew when the tenant is unsure whether the location will be a good fit. While an extension gives the existing lease a new end date, a renewal results in both a new beginning and end date.

Rent – Negotiating the rent in a commercial lease largely depends on the market. If the market is strong, a landlord is unlikely to reduce rent payments. Additionally, landlords may try to include annual increases to rent in the lease terms. A tenant should negotiate any proposed annual rent increases. The tenant may want to insist on the elimination of such a clause, get a cap on annual rent increases, or exclude rent increases in certain years. Another consideration is a gross lease vs. a net lease. A gross lease includes the costs of utilities, repairs, taxes, and insurance. A net lease does not include these costs and a tenant may prefer to negotiate a higher rent to eliminate responsibility for these potentially large costs.

Quiet Enjoyment – In the absence of an express agreement to the contrary, the landlord impliedly covenants to protect the tenant from removal by anyone having an interest in the premises that is superior to the interest of the landlord. A tenant should consider including a covenant of quiet enjoyment and removing any contrary express agreement before signing a lease. Violation of the express covenant of quiet enjoyment has been found to constitute constructive eviction, permitting the tenant to vacate the premises without liability.

Repair and Maintenance – In the absence of an express agreement to the contrary, the landlord has no obligation for repairs. The tenant must maintain the premises in the same condition as when the lease started. If not negotiated otherwise, the tenant may be required to repair the roof, windows, and doors to prevent intrusion of the elements. A tenant should include an express provision that the landlord is responsible for repairs. If a tenant follows notice procedures when a landlord fails to make repairs, a tenant may withhold rental payments and eventually may terminate the lease under Fla. Stat. 83.201.

Condition of Premises – In an absence of an express agreement to the contrary, the landlord has no liability for the condition of the premises. There is no implied warranty of habitability or fitness for use. A commercial tenant should be cautious when inspecting the premises. The tenant should ensure that the property is in useable condition for the intended purpose. An express provision should be drafted if the tenant wants the landlord to fix a condition of the premises.

It is important for both the Lessor and Lessee to understand the provisions in a commercial lease. Although negotiations prior to signing the lease may have resolved a number of deal points, other clauses will always be required in the lease. Commercial transactions can be complex and require meticulous attention to detail and superior negotiation skills. Both Lessor and Lessee should consult attorneys equipped to provide representation in the transaction.
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