The Leasing Hotline

An unauthorized subtenant that occupies commercial premises without a sublease or assignment may not be liable for rent unless it is determined that such subtenant is a “tenant at will”; such a determination is for the trier of fact and precludes summary judgment. In re: Excel Laminates, Inc., Case No. 01-20190, Chapter 7, U.S. Bankruptcy Court for the District of Kansas, April 12, 2005.

Excel began to occupy premises as an unauthorized subtenant in the landlord's building. The landlord never gave any express written consent for Excel to occupy the premises, as was required by the lease between the landlord and the original tenant. Excel filed for bankruptcy and the landlord filed proofs of claim for rent on the leased premises. The landlord moved for summary judgment, arguing that it was entitled to recover rent from Excel as a matter of law based upon two paragraphs in the lease agreement that existed between it and the original tenant. The trustee objected to the landlord's motion on the ground that Excel was not a named tenant on the lease and that the landlord never consented to Excel's occupancy of the premises. The bankruptcy court denied the motion for summary judgment. It held that the paragraphs cited by the landlord did not entitle the landlord to recover rent from Excel. The language of the lease entitled the landlord to recover only from tenants occupying the premises by virtue of assignment or sublease or other formal transfer; it did not entitle the landlord to recover rent from a mere “occupant” of the premises. The court noted that Excel might be liable for the rent if it were determined that Excel was a “tenant at will” of the entire premises ' an issue of fact that precluded summary judgment.