4th Circuit SpotlightThe federal appeals court over the Carolinas, the Virginias, and Maryland weighed in recently on what it takes to amend a commercial lease—and settle the perpetual fight over maintenance and repairs—as well as whether a racist joke is grounds for an automatic firing. The U.S. Court of Appeals for the Fourth Circuit addressed those issues in Expo Properties v. Experient and Bazemore v. Best Buy. Its rulings contain significant holdings for the commercial real estate industry specifically and employers generally.

Settling the Landlord-Tenant Fight Over Repairs

Expo Properties v. Experient involves the common fact pattern of a landlord and tenant fighting over who should pay for repairs and maintenance at the conclusion of a lease. In March 1994, the original tenant and landlord entered into a lease for an office building complex in Frederick, Maryland. The lease contained the following key provisions:

  1. Article 6 provided the tenant shall keep the exterior and interior of the premises, including the HVAC, “in good order and condition,” and shall surrender the same at the expiration of the lease “in the same good order in which they are received.”
  2. Article 8 provided the tenant shall make all necessary repairs to the roof, exterior walls and foundations. Landlord has the right to perform this work during the lease term.  Tenant shall pay for the cost of this work as additional rent.
  3. Article 24 provided that tenant shall return the premises “in as good condition as when tenant originally took possession, ordinary wear … excepted.”