Categories
Lease Disputes

How Do Florida’s Pot Laws Affect Leases?

Florida recently became one of more than 20 states to approve its own local medical marijuana program. With the new medical marijuana law coming into effect this year, landlords may be wondering how medical marijuana will affect their interactions with tenants. In this blog, David S. Tupler, a lease lawyer in Fort Lauderdale, addresses some of the most commonly raised questions and concerns raised by his Broward-based clients.

Can tenants grow marijuana for medical use?

Some states permit medical marijuana patients to grow plants for medical use at home. Florida's statute does not permit program participants to grow their own cannabis. Nevertheless, even in states in which people are permitted to grow medical cannabis at home, landlords may prohibit tenants from growing marijuana plants on their rental property by including specific term in the rental agreement. If a property owner has not included a clause in the lease prohibiting marijuana growth on the property and later decides to take issue with the activity, he or she may still bar the tenant from growing marijuana by utilizing an anti-drug or anti-crime policy if he or she specified such a policy in the lease. A landlord who wishes to leverage an anti-drug or crime policy to prohibit a tenant from growing marijuana onsite would be required to first notify the tenant in writing of the lease breach and name the specific violation of the lease terms. If the tenant continues to grow marijuana on the rental property after receiving notification of the lease violation, the landlord may then attempt to evict the tenant. Landlords who do not specify in the rental agreement that tenants are prohibited from legally growing marijuana on the premises may have a much more difficult time prohibiting the activity on their rental properties.

Prohibiting tenants from smoking pot onsite

Some tenants may argue that because Florida now has a medical marijuana program, a landlord may not prohibit tenants from smoking medical marijuana. Despite the passage of the new law in Florida, residential landlords may still prohibit tenants from smoking marijuana on their rental property in the same way in which landlords may prohibit cigar or cigarette smoking. Furthermore, smoking may negatively impact neighbors or other tenants. Therefore, it is within a landlord's general interest to reduce health hazards and annoyances, including marijuana smoke, that may affect those who reside near the property. Similarly, it is also within the landlord's interest to reduce the potential risks smoking poses to the rental property itself. To minimize the potential for unnecessary conflict with tenants, landlords should include a specific anti-smoking clause in the rental agreement prior to allowing the tenant to review and sign the lease. In the absence of an anti-smoking clause, landlords may still attempt to evict tenants who disturb others by smoking marijuana. However, in the absence of a specific clause, the process will likely require the landlord to first notify the tenant of complaints regarding the tenant's smoking then document all future instances of smoking if the tenant refuses to comply with requests to cease.

Commercial landlord lease protections

Some commercial landlords wish to lease property to marijuana-related businesses due to the premium rents these businesses are more inclined to pay. Commercial landlords must remember that although marijuana use may have been approved in some states, marijuana use, sale, plant growth, and distribution all remain illegal under federal law. Therefore, the landlords who knowingly lease property to marijuana businesses are technically aiding illegal enterprises. Moreover, the federal government may opt to enforce federal marijuana laws at any time in any manner set forth in the existing federal statutes. Landlords should also note the common lease protections that may safeguard property owners when renting to other tenants may not offer sufficient coverage when renting property to marijuana-related businesses. However, there are certain protections Florida and Hollywood landlords may wish to consider including in their rental agreements if they wish to lease property to a marijuana business.

Prescription sale in Broward County

Commercial property owners who wish to lease property to a lawful cannabis business in Broward County should include in the rental agreement a very specific use clause that lists marijuana-related activities in which the tenant is permitted to engage on the property. Examples may include details regarding forms in which the business may sell cannabis, number of plants the tenant may cultivate on the property, plant processing details, and methods of storage and transport.

Covenant to comply with all laws

Because marijuana is illegal under federal law, landlords who rent to marijuana businesses should modify boilerplate language that states the tenant must comply with all laws. Modified language may require the tenant to comply with all applicable state and local laws, including medical marijuana program licensing and rules, in addition to Fort Lauderdale zoning ordinances. The rental agreement may call for the tenant to comply with all federal laws to the extent the laws do not interfere with the tenant's right to use the rental property to run a marijuana business. Landlords should not modify or remove remaining boilerplate language that requires the tenant to comply with all federal laws that are not directly related to the growth, storage, or sale of marijuana.

Early termination clause

Leasing a rental property to a marijuana business may expose landlords to potential risks that are not typical of other tenants. Landlords who lease to marijuana businesses my face criminal prosecution, nuisance claims, property seizure, bank foreclosure, or actions by the property's co-owners because marijuana is illegal under federal law. Therefore, a landlord may wish to include an early termination clause that specifically enumerates events that may trigger the landlord's right to immediately terminate the rental agreement.

Property insurance in Hollywood & Ft. Lauderdale

Property insurance policies that cover real estate typically compensate property owners for damage that is caused by illegal activity. However, policies may differ in states in which marijuana use is legally permitted in some capacity. Therefore, it is imperative that property owners ask their insurance company whether damage caused by marijuana-related activity will be covered by their current policy or if coverage would be declined altogether due to federal marijuana policy.

These new laws are complex, and each case is unique. If you're a lessor or lessee in Broward County and have questions, consult with a Fort Lauderdale lease dispute attorney to see how these laws apply to your specific situation.

This blog will be updated as related developments occur. If you have any questions in the interim, call David S. Tupler, P.A.

Categories
Lease Disputes Lien Law

Can You File a Lien on Lease Property?

When one works on leased property, they may only they be able to lien the leasehold interest in some circumstances. The mechanic's lien law, F.S. 713.10, allows a landlord to protect his property from liens from lessee's construction by following a two-step process: One, having a provision in his lease which prohibits liens from attaching; and Two, recording that lease in the county where the property is located. This puts all interested parties on "notice" and protects the property from liens unless the improvement constitutes the "pith" of the lease. Thus, even though a lessor follows the steps above, his property may still be subject to a lien if the improvements are considered the "pith" of the lease. In such cases in Broward County, it is advisable to retain a Fort Lauderdale lien lawyer to fight on your behalf. When considering an attorney, always choose someone who also specializes in resolving legal matters between landlords and tenants – also known as lease disputes.

Determining Factors in Broward Courts

There is no clear definition of when the construction is the "pith" of the lease; however, there are a number of factors. If the construction is an integral part of the lease, where the lease requires the construction, then this may make it the pith of the lease. If it is obvious that the lease would not have been entered into without the improvements contemplated, this may subject the property to liens. Another factor is the character of the property. When the lease refers to improvements to be made and the property is vacant or partially improved and not suitable for its intended use, this may make it subject to liens. The lessors conduct is also important if the lessor is actively involved in the construction process, his lien prohibition in the lease may be deemed a fraud on lienors and make the owners interest liable. The fact that the lessor knows or approves of the construction is not enough by itself, even if the lessor approves construction plans. These are just several of the factors considered by the courts.

If one can not lien the owners interest, what can one lien? The answer is the leasehold interest. This is not much security, especially if the tenant defaults on the lease. The point is that one must know who all the parties are, not just whether one's client is reputable. If one is going to work on leased property which is properly protected or seems to be, try to get a personal guarantee from one's client or the general contractor. This is a very complex area of the law, as such it would be advisable to consult with your Broward Mechanic's lien attorney prior to working on a big job which is leased and where the lessor is not the party who contracted for the improvements in Fort Lauderdale or Hollywood.

Categories
Lease Disputes

Can Commercial Leases be Terminated?

Update, January 5, 2018: Florida's new marijuana laws have raised many questions among landlords and tenants. Lease lawyer David S. Tupler addresses some of the biggest concerns in this blog.

In Florida, a commercial lease may be legally "broken" or prematurely terminated by a Broward County landlord or a tenant when the lessor or lessee fails to honor something previously agreed upon according to the agreement, or when the landlord or tenant fails to obey an applicable law which justifies termination of the lease in Fort Lauderdale or Hollywood. Although you should always consult with a Broward lease attorney prior to taking legal action, here is some general information to get you started.

When a landlord or tenant fails to do something agreed upon a commercial lease, this is called a "breach" of the agreement. A basic and simple example of a breach of lease is when a lessee fails to pay rent. When this happens, a lessor usually has the right to terminate the agreement after written notice and opportunity to cure the default has been provided to the tenant in accordance with Florida statutes. Another example of a breach might be if a landlord fails to make promised repairs to a leased property and the agreement specifies that the lessor will make certain repairs within a specified time period.

Written notice of a breach and the opportunity to cure are essential prerequisites prior to termination of a commercial lease. For example, one of the conditions of a commercial lease may be that the lessor promises to maintain a certain amount of liability insurance on the leased property. If the landlord fails to comply with this condition, the tenant must notify the lessor in writing of the breach and give the landlord sufficient time to obtain the promised liability insurance before seeking to terminate the lease.

Breach Isn't Always Grounds for Nullification

Breach of one condition of a commercial lease does not mean that termination of the agreement will always be legally justified. If a breach does not cause sufficient harm or damage to the interests of one party, a termination of the document may not be warranted in the eyes of Broward courts. A lease dispute lawyer must prove that the breach caused a material prejudice to the party seeking the termination. In addition, the court must consider whether forfeiture of the property would result in an unconscionable, inequitable or unjust eviction from a dwelling in Fort Lauderdale or Hollywood.

Certain conditions of a commercial lease may be implied even if they are not expressly spelled out in an agreement. One implied condition in a commercial lease is the right of a tlessee to quiet and peaceable possession and enjoyment of property. If a landlord’s actions make it essentially impossible for the tenant to have quiet and peaceable possession of the leased property, a tenant may be justified in seeking to break the lease even if there is no language in the agreement specifically prohibiting the lessor's actions.

Each commercial lease is unique to the individuals and entities involved. Prematurely breaking a commercial lease without legal grounds to do so will likely have lasting negative legal ramifications and result in damaged business relationships. An individual or entity seeking to prematurely terminate a commercial lease should promptly consult with legal counsel. A more favorable and cost-effective solution for premature termination of a commercial lease may be to attempt negotiation, through counsel, of a mutually satisfactory agreement to terminate. If you are considering the termination of a commercial agreement, you should contact an attorney experienced in disputes involving leases in Fort Lauderdale, Hollywood and throughout Broward County.