Not always. In a March 2024 decision, the Appeals Court upheld a finding that a restaurant tenant who paid rent late almost every month for 21 months did not commit a material breach, and held that a judge could use equity to stop the landlord from ending the lease. The landlord got all its rent, the delays were mostly days, and losing the lease would have been a severe forfeiture. This is an unpublished Appeals Court decision under Rule 23.0, which courts may cite as persuasive but not as binding precedent.
What happened
The tenant had run a restaurant in Boston’s North End since 2008, under a ten year lease that began in 2015. The landlord bought the building in late 2016. The lease required rent on or before the first of the month, had default clauses that allowed termination, and allowed a late charge after a ten day grace period. From December 2016 to August 2018, the tenant paid after the first in every month but one, and the landlord sent at least fifteen written notices of past due rent. The tenant usually paid promptly after each notice. The landlord also complained about storage and an unsealed chimney vent raised by its insurer. In August 2018 the landlord sent a notice to quit ending the lease, even though the rent was then paid in full. The tenant sued, and after a trial the Superior Court ruled for the tenant.
What the court decided
In Varano v. PDJM Land Trust, LLC, No. 22-P-1038 (Mass. App. Ct. Mar. 18, 2024) (Rule 23.0 decision), the Appeals Court affirmed.
Late rent was not a material breach here. A breach is material when it involves an essential and inducing feature of the contract, one serious enough to justify the other side walking away. G4S Tech. LLC v. Massachusetts Tech. Park Corp., 479 Mass. 721 (2018). The court agreed the late payments were not insignificant. But the core bargain was monthly rent over many years, not rent by a particular date. The landlord received all the rent it was owed, the payments were never more than weeks late, and the judge found the delays did not hurt the landlord’s ability to pay its mortgage. The court rejected the idea that chronic late rent is always a material breach, though it said it could be in other circumstances.
The DiBella factors favored the tenant. Even when a lease has a default clause, strong equitable considerations can justify relief from forfeiture. DiBella v. Fiumara, 63 Mass. App. Ct. 640 (2005). The landlord could be compensated through the lease’s late charge, which it had used only once. Losing the space would cost the tenant its large investment in improvements, its location and its goodwill, and could put it out of business. By trial, no violations needed curing, and the judge found no bad faith.
Maintenance complaints fell short. The judge found the storage and vent issues were occasional, not willful, and fixed promptly once raised. The restaurant had passed a full city inspection and was never cited or closed.
Equity as a separate ground. The court also upheld the judge’s use of equity to avoid forfeiture. Relief from forfeiture can be granted even when a tenant’s failure to pay rent on time was willful. Howard D. Johnson Co. v. Madigan, 361 Mass. 454 (1972).
What this means for you
A default clause in your commercial lease does not give your landlord an automatic right to end it for every breach. Massachusetts courts look at whether the breach mattered, what the landlord actually lost, and what you stand to lose. This tenant won because it always paid in full, paid fast after notice, never acted in bad faith, and had a great deal invested in the space.
Do not treat this as permission to pay late. The tenant still went through years of litigation and a trial, and the judgment now orders it to pay on time. A tenant that ignores written notices, or that does not cure problems after being told about them, can lose. For that side of the line, see Ignored Lease Default Notices Can End Your Business Lease.
What to do now
- Pay rent on the date your lease sets. If a past landlord allowed a grace period, get the new owner’s terms in writing.
- When you get a notice of late rent or a lease problem, respond in writing and fix it quickly.
- Keep records of every rent payment, notice, inspection and repair.
- If you receive a notice of default or a notice to quit, get legal advice before the deadline in the notice passes.
If this is your situation, call Doubleday Law at (617) 575-2006 or tell us what happened. These cases move on short deadlines.
