It’s one of the larger mines in the minefield of renting out property as a landlord – what happens when the tenant breaches the lease? What happens when the tenant doesn’t pay? In and among the questions presented by such a scenario is whether a suit against the tenant would be cost-effective. The landlord’s decision may, in large part, depend on whether the landlord is entitled to recover its costs and attorney fees associated with prosecuting its claim against the tenant. And, in Kentucky, the landlord’s right to recover costs and attorney fees depends on the circumstances surrounding the tenant’s breach of the lease.

The temptation happens often: the deal is done, the ink is dry, the contract is finalized…then someone gets cold feet. Buyers don’t want to buy, sellers don’t want to sell, money gets tight, titles can’t be delivered, etc. What makes breach of commercial real estate contracts unique as opposed to most non-real estate contracts is that every single property is unique. No two properties can share the same physical location, but most also won’t share the same size, improvements, buildings, access, resources...the list is endless. It’s not as though the buyer can just buy the same property from another seller, and the seller who loses a buyer also loses expected capital. When one party breaches its duties in a commercial real estate contract, it’s important for the non-breaching party to understand what remedies are available. We’ll explore the most common remedies and what provisions should be in commercial real estate contracts to mitigate the effects of breach.