A landlord leased commercial property to a tenant. The parties agreed in the rental agreement that the landlord would improve the property for the tenant’s business purposes, and the tenant would repay the landlord for the improvement.
The repayment would be amortized over 10 years and included in the rent payments. The tenant breaks the lease before 10 years. Is the landlord entitled to the remaining improvement costs as past-due rent under the Forcible Entry and Detainer Act?
The Second District Appellate Court ruled no, the remaining improvement costs are not past-due rent, and therefore not collectible – as such – under the act.
In 2008, Campana Redevelopment LLC leased industrial space to Ashland Group LLC in Batavia. The lease provided Ashland $153,700 to improve the industrial space for business purposes. Ashland would repay Campana the improvement costs amortized over a 10-year period. Those costs would be included in the rental payments.
The lease also stated Ashland would pay Campana the remaining improvement costs if Ashland breached the lease.
Ashland stopped paying rent. Campana filed suit under the Forcible Entry and Detainer Act, claiming it had a right to possession due to Ashland’s failure to pay past-due rent. Campana claimed that $119,495.74 – the costs Ashland still owed Campana for the industrial space’s improvement – were part of the past-due rent.
However, the Appellate Court found that the remaining improvement costs are not past-due rent. This is because the lease amortized the improvement costs as part of the rent over a 10-year period, and those rental payments were not yet due.
The Forcible Entry and Detainer Act only allows a landlord to collect past-due rent. Therefore, because Campana only based its recovery on Ashland’s failure to pay past-due rent, and because the improvement costs were amortized over a 10-year period and those rental payments were not yet due, Campana was not entitled to the remaining $119,495.74 in improvement costs.
The case is Campana Redevelopment LLC v. Ashland Group LLC, 2013 IL.App.2d 120988.