North Carolina Lawyers Weekly
The North Carolina Court of Appeals has struck a blow for those of us with a pile of bills on our desk that we’ll get around to just as soon as it’s convenient. The court rejected a landlord’s effort to terminate a lease because the tenant didn’t pay its property taxes on the very day it was due.
RME Management leases the property housing the University Inn in Chapel Hill. (Full disclosure: Sidebar made many happy, if hazy, memories at the Time-Out bar attached to this hotel.) Last year the tenants exercised their option to renew the lease for another 49 years.
The lease—which RME was apparently very eager to wiggle out of—requires the lessee to pay all taxes “when due.” Under state law, property taxes are officially due on Sept. 1, but don’t go into arrears until Jan. 6 of the following year. Like most of us, the tenants habitually paid the taxes before they became late, but not on the first day they were due.
RME argued that this constituted a violation of the lease, however, and moved to eject the proprietors. An Orange County district court gave the motion a turn-down service, saying that the ordinary meaning of “when due” implies payment before an obligation becomes past due. On Jan. 17, the appeals court agreed.
“This is a nonsensical, hyper-technical construction of the lease and North Carolina property tax law,” Judge Valerie Zachary wrote about the landlord’s argument. Although such “when due” clauses are likely very common in leases, no North Carolina court had ever considered the issue before—probably because few landlords seeks to enforce them in such an aggressive fashion.
The hoteliers will thus not be checking out any time soon. So you could say that the decision is “innkeeping” with common sense.
