Case:  Hart v. Vermont Investment Limited Partnership, 667 A.2d 578 D.C.App. 1995)

Issue
May landlord substantially increase rent following tenant occupancy to equal rent per square foot actually occupied when the space actually occupied is significantly larger than that contemplated in the lease?


Discussion
Landlord and tenant entered into a lease for 4,060 square feet of office space. The lease contemplated that the tenant's premises be measured following tenant occupancy with the amount of square footage to be adjusted to reflect actual space occupied and the rent adjusted accordingly at the rate of $18.25 per square foot.

After the tenant moved into the leased premises, the landlord billed the tenant for rent based upon the premises including 4,625 square feet. The original landlord then sold the premises to a new landlord who claimed the premises actually included 4,833 square feet.

The tenant, who was a law firm under stress because of lost partners, objected arguing that the adjustment mechanism only applied to minor adjustments. The adjustment clause in the lease provided:

[i]n the event that the square footage of the Leased Premises determined pursuant to Section 1.01 hereof is different [from] the square footage provided for in said Section 1.01 the minimum rent shall be adjusted accordingly.

Although the landlord never apparently followed the regimen for measurement referenced in Section 1.01, the court did not consider this as invalidating landlord's square footage determination which was not contested on the record.

When landlord and tenant were unable to agree on the amount of rent owing tenant abandoned the premises. Landlord sued the tenant claiming rent for the full 4,833 square feet.

Holding
The appellate court reversed the trial court decision invalidating the clause. It held the clause was clear and enforceable authorizing the landlord to bill tenant for the recalculated rent based upon the amount of space occupied by tenant rather than the amount specified in the lease. It found no limitation of the sort claimed by the tenant. It acknowledged that if the discrepancy had been sufficiently large, some relief might have been merited on an unconscionability argument. However the difference here was not great enough to invalidate the lease as unconscionable. The appellate court held landlord was entitled to recover its damages for the actual amount of square footage which tenant had occupied, not just the 4,060 square feet. It ordered the trial court to determine the amount of space which tenant had occupied and to set damages accordingly.