If you lease commercial property, there will probably be a time when you encounter a tenant who refuses to pay rent, due to an unfounded complaint about the condition of the premises or some other perceived breach of the lease by the landlord, yet the tenant continues to occupy the leased space. This leaves the landlord without the rent
If you lease commercial property, there will probably be a time when you encounter a tenant who refuses to pay rent, due to an unfounded complaint about the condition of the premises or some other perceived breach of the lease by the landlord, yet the tenant continues to occupy the leased space. This leaves the landlord without the rent or the property and creates a dilemma for the landlord. The landlord can capitulate and negotiate the reinstatement of rental payments by the tenant sooner rather than later, or it can evict for non-payment, a process which can be not only expensive, but also slow. Meanwhile, both the property and the rental payments are tied up.
But what if the tenant’s complaint is unjustified or is a pretext to negotiate out of a multi-year lease? By refusing to pay rent and retaining possession during the dispute, a tenant can wreak havoc on a landlord who still must make the mortgage payments to a bank that does not care if the property is performing. Fortunately, the Florida legislature recognized the unfair advantage to a tenant when refusing to pay rent during a dispute while remaining in possession, and created a “pay to play” provision where a tenant must pay rent to the court registry during an eviction proceeding if it wants to remain in possession of the property. Recognizing the distinction between a claim for past breach, not sufficient to cause a tenant to declare termination of the lease, and the ongoing lease payment obligation for continued possession by the tenant, the legislature enacted § 83.232, Fla. Stat. in 1993, which requires a commercial tenant responding to a claim for possession to pay to the court registry (1) all unpaid rent as alleged in the complaint, or in the amount determined by the court, and (2) rent that accrues during the litigation. Normally, this money would remain in the court registry until the conclusion of the case; however, if the landlord can demonstrate that it is in actual danger of loss of the premises or other hardship resulting from the loss of rental income from the premises, the landlord may apply for disbursement of all or part of the funds held in the court registry while the lawsuit is pending.
If the tenant fails or refuses to make these payments to the court registry, the failure shall be deemed an absolute waiver of the tenant’s defenses to the possessory action and the landlord is entitled to an immediate default for possession. However, it is important to remember that § 83.232, Fla. Stat. only applies to the claim for possession of the property. If a tenant asserted a counterclaim for damages due to an alleged past breach of lease in response to an eviction action, the counterclaim is not affected by the tenant’s loss of possession during the litigation. Notwithstanding, the assertion of a counterclaim for damages by a tenant does not relieve it of its obligations to pay rent to the court registry.
The judge assigned to an eviction case has a ministerial duty to immediately order the tenant to tender the unpaid rent to the court registry upon the filing of the tenant’s initial pleading, motion or other paper. If the court fails to enter this order, the tenant is still obliged to make the payment to the court registry and to do so in a timely manner. DTRS Intercontinental Miami, LLC v. A.K. Gift Shop, Inc., 77 So. 3d 785 (Fla. 3d DCA 2011). Notwithstanding, a landlord filing a commercial eviction may want to immediately file a motion requesting the court to enter an order directing payment into the court registry.
During the litigation, the tenant must continue to make the lease payments as required by the lease to the court registry, and must make the payments “when due.” A tenant who does not make accrued rent payments into the court registry “when due” forfeits its right of possession. Kosoy Kendall Associates, LLC v. Los Latinos Rest. Inc., 10 So. 3d 1168 (Fla. 3d DCA 2009). Further, the court has no discretion to entertain reasons why rent was not paid into the registry. Misha Enterprises v. GAR Enterprises, LLC, 117 So.3d 850 (Fla. 4thDCA 2013). For example, in Park Adult Residential Facility, Inc. v. Dan Designs, Inc., 36 So. 3d 811, 812 (Fla. 3d DCA 2010), the tenant “was unable to deposit the rent by November 3, 2009, because law enforcement closed the offices of tenant's attorneys.” Notwithstanding, the tenant still forfeited its right of possession for failure to make the accrued rent payment “when due,” as required by the statutory language. As the court stated, “[t]he law is the law… it is not our job to carve exceptions into an otherwise clear and imperative statute.”
A commercial landlord in Florida can level the playing field with a recalcitrant tenant improperly withholding rent and retaining possession to coerce the landlord into doing something not required by the lease. Through § 83.232, a landlord may quickly re-acquire possession of the property in an eviction proceeding while the tenant’s claim of past breach is litigated, or at least obtain the security of the past due and accrued rental payments paid by the tenant into the court registry, which can be accessed by the landlord under certain circumstances. In either scenario, the commercial tenant has to put some “skin in the game” to keep the property during a dispute with the landlord over possession, and can no longer tie up the leased property during litigation without paying for that privilege.