By Bob L. Olson
Nevada, like many jurisdictions, has recognized the ability of a tenant to vacate property if it becomes unfit for occupancy for the purpose for which it was leased. This is commonly known as a “constructive eviction.” Traditionally, to establish a claim for or defense of constructive eviction, the tenant had to prove the following three elements:
1. The landlord either acted or failed to act;
2. The landlord’s action or inaction rendered the whole or a substantial part of the premises unfit of occupancy for the purpose for which it was leased; and
3. The tenant must actually vacate the property within a reasonable time.
The Nevada Supreme court added a fourth element in commercial leases in Mason-McDuffie Real Estate, Inc. v. Villa Fiore Development, LLC, 130 Nev. Adv. Op. 83 (October 2, 2014). In Mason-McDuffie the court held that a commercial tenant must also demonstrate that it gave the landlord notice of and a reasonable opportunity to cure the defect. The court reasoned that this additional element “encourages the parties to discuss and potentially resolve deficient conditions in leased premises outside of the courts” and “protects both landlords’ expectations in rental income and tenants’ rights to possess the leased premises free from excessive intrusions by the landlord.”
This is an interesting development for a number of reasons. First, although in Mason-McDuffie the landlord alleged and the lower court agreed that the tenant failed to give the landlord 30 days to cure the defect (water intrusion), as required by the lease, the Nevada Supreme Court assumed, without deciding, that the lease did not require the tenant to give notice and an opportunity to cure before the tenant could assert a constructive eviction. Thus, a commercial tenant asserting that it was constructively evicted now has to establish the fourth element even if such a notice and opportunity to cure is not required by the lease.
Second, Mason-McDuffie involved a commercial lease. It is unclear whether the Nevada Supreme Court would impose this requirement upon tenants of residential property.
Third, and most interesting, is the tension that now exists between the third and fourth elements. These inconsistent elements seemingly create a catch 22 for the tenant. In law school we were taught that in order for a tenant to assert that it was constructively evicted, it had to timely vacate the leased premises or risk waiving the right to assert that it was constructively evicted. Now, if a tenant vacates the leased property with little or no notice to the landlord, the landlord would likely allege that the tenant failed to give it notice and a reasonable opportunity to cure the defect. Conversely, if a tenant gives the landlord what may appear to be a reasonable opportunity to cure the defect, the landlord would likely allege that the tenant cannot establish the third element because it did not vacate the property in a reasonable time.