Work with Owner to Get Options Better Than Holdover

Work with Owner to Get Options Better Than Holdover

Q: The owner of the shopping center where I rent space is trying to change the synergy there to make it more high-end. In the process, it’s decided to terminate the leases for some of the less upscale retailers there, which includes my local small business. The owner has complied with the termination requirements in my lease, but I’m considering holding over and refusing to move out of the space. The process of revamping the center has been slow, and I know that there hasn’t been any interest yet in my space, and the owner doesn’t plan to use the space for anything in the near future. I’m looking for new space, but have been unsuccessful so far. If the owner asks a court for an injunction (rather than other legal remedies) to force me to move out quickly, what’s the likelihood that one will be granted?

A: In your scenario, the owner is unlikely to get an injunction. Generally, in order to get an injunction, an owner would have to show that there’s no other adequate remedy at law and that the tenant’s holdover is causing a permanent and continuing injury. Here, it could pursue other ways to evict you, even though that might be slower and tedious. And, it sounds like the owner doesn’t have a sense of urgency in replacing your business and isn’t afraid of losing the opportunity to rent to a replacement tenant. The redevelopment of the center seems to be gradual.

An Alabama airport owner learned the hard way that its inability to show that an injunction was the only way of resolving a holdover situation and that the holdover would irreparably harm it meant that it wasn’t entitled to an injunction and would have to pursue its other remedies. There, the owner leased space to a tenant that would provide gas, supplies, and other goods and services to customers flying into the airport. The lease could be terminated by either party with 90 days’ notice. The owner gave notice to the tenant, but the tenant refused to vacate the premises. The owner asked a circuit court for a preliminary injunction—that is, an order from the court forcing the tenant to move out of its space immediately. The court granted the owner’s request. The tenant appealed.

An Alabama appeals court noted that the prevailing rule is that an injunction ordinarily is not available to a landlord for the recovery of possession of the premises except where there is no adequate remedy at law and the landlord is threatened with a permanent and continuing injury. The appeals court pointed out that Alabama law provides various legal remedies pursuant to which a commercial landlord may regain possession of premises wrongfully withheld by a holdover tenant—for example, a common-law action of ejectment, a statutory action of ejectment, or an unlawful-detainer proceeding. But the owner didn’t present any evidence indicating that those legal remedies wouldn’t be adequate or that it was being threatened with a permanent and continuing injury, the appeals court said.

The owner failed to prove that it: (1) had no adequate remedy at law; or (2) would suffer irreparable injury absent the granting of the injunction. Accordingly, the appeals court reversed the circuit court’s judgment and sent the case back to the lower court for an opinion consistent with the appeals court’s judgment [Selma Air Center, Inc. v. Craig Field Airport and Industrial Authority, May 2016].

Although this case was ultimately decided in the tenant’s favor, you should work with the owner to come up with better options than holding over, which creates an unpleasant situation for you and the owner, and creates a risk of you incurring holdover fees and other potentially expensive consequences of staying in the space. Consider negotiating with the owner for a month-to-month leasing arrangement. Or you could agree to move out of the space if or when the owner finds a replacement tenant that fits its new luxury retail synergy.