How can I avoid being sued for breaking the lease in South Carolina?

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Question:

How can I avoid being sued for breaking the lease in South Carolina?

Answer:

Commercial leases in South Carolina are governed under S.C. Code Title 36 Chapter 2a Commercial Code - Leases. The provisions stipulate the rights and obligations of both lessor and lessee when a commercial lease is breached. Except as limited by the Code, in most cases the rights and remedies of the parties will be stated in the lease agreement. The Code provides remedies where the remedies for breach are absent or not sufficiently addressed within the agreement.

In bad economic times, it is not unusual that tenants may request to be released or to modify the lease contract to reflect a downturn in profits. This situation is generally anticipated in the contract where parties agree what will happen if one party cannot fulfill its duties. Sometimes a lease landlord will allow a rent abatement in a slowdown, where the tenant may only have to pay a percentage of the monthly rent during the affected months.

Some agreements allow a tenant to "go dark" in lieu of defaulting on the agreement. "Going dark" allows the tenant to pay a modified rent while it closes operations, thereby avoiding the futile costs of operating a store in slow economic times.

Other agreements allow an exit clause for both parties if the contract becomes too onerous for one or both. The exit clause is usually accompanied by the responsibilities and damages that must be satisfied in order to avoid civil penalties.

If your agreement does not include these safeguards, South Carolina law provides the following:

Current Law

SECTION 36-2A-107. Waiver or renunciation of claim or right after default.

Any claim or right arising out of an alleged default or breach of warranty may be discharged in whole or in part without consideration by a written waiver or renunciation signed and delivered by the aggrieved party.

SECTION 36-2A-501. Default: procedure.

(1) Whether the lessor or the lessee is in default under a lease contract is determined by the lease agreement and this chapter.

(2) If the lessor or the lessee is in default under the lease contract, the party seeking enforcement has rights and remedies as provided in this chapter and, except as limited by this chapter, as provided in the lease agreement.

(3) If the lessor or the lessee is in default under the lease contract, the party seeking enforcement may reduce the party's claim to judgment, or otherwise enforce the lease contract by self-help or any available judicial procedure or nonjudicial procedure, including administrative proceeding, arbitration, or the like, in accordance with this chapter.

SECTION 36-2A-506. Statute of limitations.

(1) An action for default under a lease contract, including breach of warranty or indemnity, must be commenced within four years after the cause of action accrued. By the original lease contract the parties may reduce the period of limitation to not less than one year.

Under these provisions the aggrieved party may waive any claims after the default and simply let the defaulting party walk away. Alternatively, both parties may seek administrative remedies including arbitration in lieu of civil action. In the case the aggrieved party does wish to pursue civil action, they must do so within four years after the breach or lose their right to sue.

Talk with an experienced commercial real estate attorney to discuss South Carolina lawsuits that arise when a lease is broken.

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