Articles Posted in Real Estate Litigation

In Nashville, as well as all other Tennessee cities and counties, there is plenty of land— commercial, residential, rural, and urban— that is owned by more than one person as tenants in common, also sometimes referred to as “co-tenants.” There can be two tenants in common or more, to a single piece of real estate.

The fundamental distinction of tenants in common is that each has an undivided interest, equal to their ownership share, in the entire piece of real estate. So, if there are two tenants in common, each has an undivided one-half interest in the entire property. Thus, both have the right to use all of the property and to share in the profits made from it, if any. Joint ownership of this nature, not surprisingly, frequently results in conflicts and problems. And, frequently, those conflicts and problems cause one, or more, of the co-tenants to seek the help of a Tennessee court by filing a partition lawsuit.

In Tennessee, the right of a co-tenant to have real estate partitioned is absolute. Tennessee law follows the rule that, if you do not want to continue to have to own property with another co-tenant or co-tenants, you don’t have to do so. If you file a partition action, a Tennessee court must partition the real estate. A Tennessee court cannot deny you your right to get out of your tenancy in common.

Landowners in Tennessee sometimes become defendants in eminent domain cases (also called condemnation actions) filed by the state, or a city or county government. These cases often become “battles of appraisers.”

When the government files a condemnation case, it must pay just compensation to the landowner. Tennessee courts have defined “just compensation” to mean “market value” which they have further defined to mean the price which a willing buyer would pay to a willing seller assuming that the seller was not required to sell the land and the purchaser was not required to purchase it. The date that market value is to be determined, in an eminent domain case, is the date of appropriation. (Not some future date or past date).

In determining market value in condemnation cases, all the factors that enhance or detract from the value of the land should be considered. For example, it is proper to consider the other reasonable available uses of the property, and comparable sales. It is not proper for a jury to consider any increase or decrease in the value of the land because of the announcement or construction of a new improvement on the property.

In situations in which a tenant under a commercial lease is in default, landlords tempted to lock the tenant out or to repossess the property should proceed with due respect for a Tennessee statute that has been around since 1821. That statute is known as the “forcible entry and detainer” statute.

The forcible entry and detainer statute creates a right on the part of the landlord to bring a court action to obtain a writ of possession for real property (held under either a commercial lease or residential lease) where the tenant continues to occupy the property after the lease has been terminated. The statute is a two-edged sword, so to speak, because its existence also makes it unlawful for a landlord to repossess or to lock out a tenant unless the landlord first obtains a writ of possession via a forcible entry and detainer action.

A Tennessee commercial lease case involving a commercial space at the Memphis, Tennessee Airport, discusses the rationale behind the Tennessee forcible entry and detainer statute, and how the landlord in that case ran afoul of the statute. In that case, the landlord had a lease which provided: “In the event of the cancellation or termination of this Lease by the Lessor, the Lessor may immediately or any time thereafter re-enter the demised premises… and repossess and have the same….” The lease in that case did not require the landlord to obtain court approval of any type before re-taking possession of the property.

Commercial lease cases sometimes involve disputes about lease renewal provisions and/or the lessee’s (tenant’s) right to renew the lease for an additional period of time. There are some general rules which Tennessee courts follow in resolving lease cases where there are disputes about renewal.

First, if someone leases property and obtains, in the lease agreement, the right to renew the lease for an additional term after the original lease term expires, that right cannot be taken away by the lessor of the property (the landlord) unless there is also a contract provision allowing the lessor to do just that (which, typically, there would not be). Second, if the lessor (landlord) assigns a lease to another party or sells the property which is leased, the successor to the lessor will be subject to the obligation to honor the lessee’s (tenant’s) right to renew. (If the lease agreement states that, if the property is assigned or sold, the lessee (tenant) loses its right to renew, then, in that event, the general rule will not apply, and the lessee (tenant) will not have the right to renew).

Where a lease contains specific terms about the manner and time period by which the lessee (tenant) must give notice of its intent to renew the lease, then, absent a waiver of those provisions by the lessor (landlord), the lessee must give the renewal notice in the manner and within the time period set forth in the lease. There have been cases in Tennessee where tenants (lessees) have not complied with terms related to renewal, yet have been successful in having a court decide that the renewal was effective.