For over 150 years, a tenant's covenant to pay rent and a landlord's covenant to repair were completely independent, and the breach of one did not excuse the performance of the other. This rule was articulated in Edwards v. Ward Associates, Inc., 367 S.W.2d 390 (Tex. Civ. App. - Dallas 1963, writ ref'd n.r.e.), and remained the law in Texas until 2019. A tenant’s only remedy was to sue a landlord for monetary damages related to breach.
The Rule Change: Rohrmoos v. UTSW Healthcare
In 2019, the Texas Supreme Court issued a ruling that reversed what was well settled law. The Court ruled that a tenant may terminate a lease for a landlord's prior material breach. Rohrmoos Venture v. UTSW DVA Healthcare, LLP, 578 S.W.3d 469 (Tex. 2019).
The Court went on to eliminate the independent covenant doctrine that applied to leases for over a century. They noted that the doctrine was no longer being applied to residential leases, and that this rule should apply to commercial leases as well. The primary objective of a lease, residential or commercial, is to provide the tenant with premises suitable for the intended use. The tenant’s obligations are dependent on the landlord meeting their obligations, and thus the independent covenant doctrine does not apply. Id.
How Can a Landlord Protect Against the Rohrmoos Pitfall?
How can a landlord avoid tenant lease termination after Rohrmoos? One of the best ways is through careful and conscientious drafting when creating a lease. The drafting attorney should include:
- A clause stating that all landlord and tenant covenants shall remain independent.
- A clause waiving the landlord’s warranty of suitability.
- A provision stating that the only remedy for landlord's default is a suit for damages.
- Define what constitutes a material breach of the lease.
- Statement that both parties were represented by attorneys.
Just like other contracts, the language in the lease controls. The easiest way to avoid any problems is to specify what will happen in a breach or termination situation.
Conclusion
Commercial and residential leases are complex agreements. Both tenants and landlords should seek competent counsel when dealing with lease termination as a remedy.
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