Legal Question in Business Law in South Dakota

lease in mall

We have 21 mo left on lease. Mall traffic is down & another coffee store has opened in the mall so we are losing money. What are the ramifications if we close our doors?


Asked on 5/03/07, 5:05 pm

1 Answer from Attorneys

Edward Hoffman Law Offices of Edward A. Hoffman

Re: lease in mall

That depends upon what your lease says.

Ordinarily, you would remain liable for the rent. The mall would have to try in good faith to find a new tenant to take over your space, and your liability would be limited to the rental value before the new tenant starts paying, plus the mall's reasonable costs of finding and negotiating with the new tenant, plus any difference between the new tenant's rent and what you were paying. If the new tenant pays more than you did, the extra rent might offset the mall's losses and you might thus end up owing nothing.

I say "ordinarily" because your lease agreement may modify your and the mall's rights and responsibilities in the event of a breach.

It is also possible that your difficulties result from some breach by the mall. For example, your lease agreement may require the mall to market itself in a way it has not done, or might forbid it to lease space near yours to a direct competitor. If your difficulties were caused by the mall's breach then it may have to let you out of the lease and may even owe you money.

It is also possible that your state has modified the legal rules that traditionally governed rental agreements; I am not a South Dakota lawyer and do not know whether the applicable laws there differ materially from those of other states. You should go over your contract with a local attorney who specializes in commercial leases. Doing so will probably cost you several hundred dollars, but it may turn out to be money well spent.

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Answered on 5/03/07, 7:51 pm


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