Landlord Entitled to Limited Additional Rent

Ian M. Livaich and Igor Pleskov of Saul Ewing Arnstein & Lehr (Photo: Courtesy Photo)

On April 9, the Pennsylvania Superior Court held that a commercial landlord was entitled to recover certain portions of unpaid additional rent under a lease agreement but limited the landlord’s recovery based on the statute of limitations. While the decision was nonprecedential, the case provides helpful guidance to practitioners in determining when claims for rent should be brought against a tenant in a commercial lease agreement and emphasizes the importance of timely filing any claims under a lease agreement for unpaid rent.

In Tsung Tsin Association v. Luen Fong Produce, a landlord alleged that its commercial tenant, a grocery store in Philadelphia’s Chinatown, failed to pay additional rent as required under the lease agreement. In 1995, the landlord and the tenant entered into a multiyear commercial lease agreement that required the tenant to pay the landlord for additional rent, including increases in property taxes, use and occupancy taxes, and water, sewer, and gas expenses. The landlord and the tenant then entered into a new lease agreement in 2003, which was determined by the court to supplant the original lease agreement and govern the relationship between the parties in the dispute. Notably, the new lease agreement only required the tenant to pay increases in property taxes and use and occupancy taxes. Payment of water and sewer expenses were only required if certain conditions under the lease agreement were met.