Commercial Landlord-Tenant—Court Invalidates $500-Per-Day Liquidated Damage Provision On Ground That it Was a “Penalty”—Laches
In November 2013, a landord and tenant entered into a surrender agreement (agreement), pursuant to which the tenant agreed to surrender its lease to the landlord. The agreement provided that the tenant would receive two payments of $475,000 from the landlord. The first payment was timely made. The second payment was deposited with an escrow agent (agent) and was to be paid to the tenant upon the tenant’s “vacatur of the premises by July 31, 2014.” The agreement also required the landlord “to remit to [the tenant] the security deposit of $48,378 by Dec. 31, 2013.” If the landlord failed to timely return the security deposit, the agreement required the landlord to pay $500 per day as liquidated damages.
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