Lease Audit Information

TOPIC OF THE WEEK:

SS Silberblatt, Inc. v. US Postal Service (No. 98-16570, 2000 US App. Lexis 964 (9th Cir. January 21, 2000)):

In this unpublished decision, the federal appeals court in California ruled that the tenant was never in default of its lease even though the tenant unilaterally offset rent to recover overpaid lease charges.

Under the lease, the tenant was required to pay its share of real estate taxes as additional rent. The Landlord received a refund on account of the real estate taxes, but refused to credit the tenant for the refund. The tenant then offset rent in the amount of its share of the refund. The Landlord subsequently sued for nonpayment of rent. The court ruled in favor of the tenant, holding that the refund served to reduce the additional rent and therefore the tenant was never in default.

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