Hello landlords and tenants. I’m going to talk about “jurisdiction” in the context of a commercial real estate lease. My name is Jenna Zebrowski and I am the attorney behind LawByJZ.com. Jurisdiction defines the area where the legal authority is held.
Basically, it tells you what law is going to control the decision that is made in the event of a dispute. Even if the tenant and the property are located close to each other, the landlord might be somewhere else entirely, and the law you think applies to your commercial real estate lease situation, actually, might not. So if you’re depending on the law to protect you, make sure it’s the right jurisdiction!
Commercial Real Estate Case Study
Jurisdiction: Where the Legal Action Happens
Stacey’s yoga studio didn’t pay rent for several months due to a drop in client attendance during the pandemic. She was able to switch to virtual classes, but the landlord got upset when she didn’t pay rent fast enough and declared her in default. She and the landlord weren’t able to negotiate a payment plan, so the landlord filed a lawsuit for the unpaid rent. The lawsuit was filed in the state where the landlord lived, which was not the same one where Stacey, or her yoga studio, were actually located .
Stacey was concerned about receiving a lawsuit that was from a state halfway across the country where she didn’t know anyone. She turned to the attorney that negotiated her lease, and quickly discovered the landlord’s mistake- the lawsuit had been filed in the wrong place!
Jurisdiction dictates what law controls and where all of the legal action will take place in the event of a lawsuit. Landlords, and their attorneys, aren’t always in the same state where the leased property actually is, so they like to stick to the laws they know, which are local to them. That could mean a lot of uncertainty and expense for a tenant that would have to answer a lawsuit filed in a different state.
Because Stacey’s attorney read and understood the consequences of the entire lease, the jurisdiction was changed to the state where Stacey’s yoga studio was located. The landlord’s attorney hadn’t read the lease carefully and filed the lawsuit in the wrong state.
Stacey’s lease meant that she could hire a local attorney she knew and trusted would do a good job with her case. She saved time and probably some money as well, and the landlord had to do the extra work to find, and pay, another attorney that was licensed in jurisdiction and to refile the lawsuit!