Often, yes. Massachusetts courts presume that a liquidated damages or rent acceleration clause in a commercial lease is valid, especially when both sides were sophisticated, and the tenant has the burden to prove it is an unenforceable penalty. In this case the Appeals Court upheld a large damages award against a medical practice and its principal after the practice left its space early. This is an unpublished Appeals Court decision under Rule 23.0, which courts may cite as persuasive but not as binding precedent.
What happened
In May 2017 a landlord leased two suites in a Raynham commercial building to a medical practice for five years. The lease had a clause saying that after a default, the tenant would keep paying, as liquidated damages, the rent and other charges due for the rest of the term, minus any net proceeds from reletting. The practice paid on time for about a year, then fell behind. The landlord brought a summary process case, and the parties signed an agreement for judgment that let the landlord use an execution if the tenant defaulted again. In August 2019 the practice defaulted and, by agreement, moved out at the end of the month. The landlord then sued in the Superior Court for breach of the lease and breach of a personal guaranty, won on liability, and was awarded $386,273.70 plus interest and attorney’s fees.
What the court decided
The Appeals Court affirmed in Paramount MOB, LLC v. Tristan Medical Enterprises, P.C., No. 24-P-375 (Mass. App. Ct. July 10, 2025) (Rule 23.0 decision).
The tenant’s principal was sophisticated. Whether a party is sophisticated is a question of fact. Cummings Props., LLC v. Hines, 492 Mass. 867 (2023). The judge found the principal had owned the building before selling it to the landlord, knew commercial leases and common area maintenance charges, and had a lawyer during the lease negotiations. The Appeals Court saw no clear error.
The clause was not a penalty. A liquidated damages clause is presumed valid, especially when two sophisticated parties negotiated it. Hines, 492 Mass. 867. It will usually be enforced if, when the contract was signed, actual damages were hard to predict and the agreed amount was a reasonable forecast of them. Cummings Props., LLC v. National Communications Corp., 449 Mass. 490 (2007). Rent acceleration clauses fall under this same rule. The court looks only at the time the contract was made. It does not take a second look at the actual damages after the breach. NPS, LLC v. Minihane, 451 Mass. 417 (2008).
The burden was on the tenant. The tenant argued the landlord never proved its losses were hard to calculate. The court said that gets the law backward. The party attacking the clause must prove it is unenforceable, and the tenant did not.
No credit for the next tenant’s rent. The tenant also wanted credit for rent paid by a later tenant. The court rejected that too. When a liquidated damages clause is valid, mitigation is irrelevant. NPS, LLC, 451 Mass. 417. The court also rejected an argument that unnamed later lease documents made the lease unclear, since the case had been tried on the signed lease the parties agreed to.
What this means for you
If you run a small business and rent space, read the default section of your lease before you sign. A clause that makes you pay rent for the rest of the term after you leave can be enforced, and the court may refuse to credit you for rent a later tenant pays. Courts give these clauses a strong presumption of validity when both sides were experienced and had lawyers.
Here the landlord also sued the practice’s principal on a personal guaranty of the lease. When the owner of a business signs a guaranty, the landlord can pursue the owner personally, not just the company.
Finally, settling the eviction case did not end the exposure. Moving out by agreement ended the tenancy, but the landlord still sued for the rest of the lease. If you negotiate a move out, the agreement should address future rent, not just possession.
What to do now
- Before signing, have a lawyer review any liquidated damages, acceleration and personal guaranty clauses, and negotiate caps or a buyout.
- If you are falling behind, talk to a lawyer before you move out or sign an agreement for judgment.
- Any move out agreement should say in writing whether future rent and guaranty claims are released.
- If you think a clause is a penalty, gather proof from the time of signing showing damages were easy to predict or the amount was far out of line.
If this is your situation, call Doubleday Law at (617) 575-2006 or tell us what happened. These cases move on short deadlines.
Prior results do not guarantee a similar outcome.
