Earlier this month, an important judgement was issued by the Massachusetts Supreme Judicial Court (SJC), reaffirming the enforceability of accelerated rent as liquidated damages following a lessee’s default in commercial leases. The notable case was Cummings Properties, LLC vs. Darryl C. Hines, No. SJC-13406 (Sept. 25, 2023).
For commercial landlords, this ruling provides assurance of their ability to stipulate, in their leases, that accelerated rent serves as liquidated damages in the event of a lease default. This decision only adds to a series of laws and rulings that cumulatively support the notion that these hard-fought lease provisions are indeed viable and can be enforced legally.
The essence of the case revolved around the interpretation of whether the clause applying accelerated rent as liquidated damages in the instance of a lessee’s default was legally defensible. The SJC’s decision in favor of such enforceability underscores the breadth of latitude typically accorded by the courts to business arrangements freely established between parties of equal bargaining power.
This decision, as significant as it may be, should not be taken as an absolute guarantee across all jurisdictions, particularly those in other states and countries. It is recommended that commercial landlords always seek the advice of an experienced commercial real estate attorney when crafting the terms of their leases to ensure that they are abiding by the laws specific to their jurisdiction.