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32. In an appropriate action among the landlord, the tenant, and the city as to the right of the tenant to a portion of the condemnation award, for whom will the court likely find?
The tenant notified the city and the landlord that an independent appraisal of the value of the tenant's possessory interest established that it substantially exceeded the tenant's obligation under the lease and that the tenant was entitled to share the award. The appraisal was accurate.
Six years ago, a landlord and a tenant entered into a 10-year commercial lease of land. The written lease provided that if a public entity under the power of eminent domain condemned any part of the land but not all of it, the lease would terminate and the landlord would receive the entire condemnation award. Thereafter, the city condemned approximately two-thirds of the land.
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A is incorrect. This answer correctly concludes that the landlord will prevail but misstates the reasoning for this conclusion. If the city had condemned all of the land, the lease would have terminated and the tenant might have been able to receive the sum by which the award exceeded the tenant's obligations under the lease. The city condemned only two-thirds of the land. The lease provided that upon a partial condemnation, the lease would terminate and the landlord would receive the entire condemnation award.
C is incorrect. The taking of all or part of leased land under the power of eminent domain is not a breach of the landlord's warranty of quiet enjoyment. The condemnation occurred through no fault of the landlord. The lease provided that upon a partial condemnation, the lease would terminate and the landlord would receive the entire condemnation award.
D is incorrect. If all the leased land had been condemned, the lease would have terminated by operation of law. Here, only a portion of the land was condemned. If the lease had not otherwise provided, the tenant's obligation under the lease to pay rent would have continued (though it might have been abated). Here the tenant and the landlord agreed that upon a partial condemnation, the lease would terminate and the landlord would receive the entire condemnation award. There was no unjust enrichment.