Question:

Three years ago I signed a five year lease for office space in an office condo building. An integral part of the lease was a purchase option, to be able to purchase the office space at a set price. The purchase option expired after three years. My intention from the beginning was to exercise the purchase option, and that was the reason I entered into the lease willing to pay the high monthly rent.
Before the expiration of the purchase option, I gave notice that I would be exercising the purchase option. I incurred significant costs in preparing for the closing, bank fee for mortgage approval, appraisal fee, legal fees, title search, etc. The landlord is Jewish, although not frum.

Little did I know, because it was never disclosed to me, but the Condo Association for the office building has in its condo documents, a right of first, second and third refusal. Meaning that if any unit in the building is about to be sold, then the immediate neighbor (the Bar Metzra) has the right of first refusal, any owner in the entire building has the right of second refusal, and the Condo Association has the right of third refusal. It turns out that an owner two floors up exercised his right of second refusal, and will be purchasing the unit from under me, and I will be left renting the unit from a new landlord.
My attorney advised me to sue the landlord and the broker who wrote up the lease without disclosing this right of refusal to me, but I chose not to sue.

I believe the new landlord is Jewish, possible even orthodox. The broker is also Jewish, but not frum.

My lawyer further advises me that my current lease is in default, since the purchase option was an integral part of the lease, and due to no fault of my own, it cannot be exercised. Being in default, my attorney tells me that I may be able to walk away from lease before the 5 years are up.

Through my attorney, I have asked the new landlord for two things; a reduction in rent, so that the rent that I will pay will be around what I would have paid had the purchase gone through, and a 90 day out clause, so that I don’t have to stay the remaining two years of the lease. I will need to look for new office space. I do have a 5 year option to extend my lease at the end of the first 5 year period. We have offered to forgo that extension in exchange for the reduction in rent and the 90 day out clause.

My question is how halacha views this lease, the alleged default, and my rights and obligations to the new landlord.

Before I attempt to take a hard line in negotiating my two demands, I would like to know what the halacha is.

Answer:

Answer from Horav Y. Fleishman Shlit”a.

It depends-if such conditions are frequent in condominiums then he may be perfectly right because your lawyer should have looked into it before renting to begin with.

Also what is their argument why they never told you.

Furthermore if your first landlord was a goy you don’t have to take into account the Torah law because when dealing with a goy if the secular law is better for you , you can take advantage of that fact.

 

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4 Responses to “Lease in default or breaking a lease”

  1. All parties are Jewish, although not all religious. The previous landlord, the broker, my lawyer and the new landlord.

    I am told that this is NOT a common provision in condo associations, in fact, I am told it is unheard of.

    As to why they never disclosed the information, they have no answer. The broker is clearly at fault, and my attorney says that the previous landlord is at fault as well. Had they disclosed it to me, I would have structured my lease differently, with an “out clause” and reduction in rent if the right of first refusal was actually exercised.

    Is the new landlord in violation of “ani hamehapech”?

    • He is not in violation bec he had that right to begin with
      If it unheard of, your lawyer is correct but your complaint is with the landlord and broker-not the buyer.

  2. What about my lease “being in default” because the purchase option could not be exercised?

    There are two more years left on the lease. I don’t want to stay for the next two years paying the same rate I am currently paying, and with a 5% increase every year as the lease calls for. I would like to be able to leave when I can find another space to purchase. Am I obligated to stay for the remaining two years of the lease, even though my lawyer tells me that my lease is in default, and my lawyer tells me that there is an argument to say that I should be able to leave whenever I want?

    • Reply from R’ Fleishman

      I agree that if that is correct that they should have told you abt the right of refusal then you can argue that it is a mekach tous and therefore break the lease

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