## Facts

- A physician leased medical office space in a professional building under a five-year commercial lease for use as a medical office.
- Monthly rent was $793.26; the landlord agreed to provide air conditioning, electricity, hot water, janitorial and maintenance services, light fixtures, and security services.
- After occupancy, persistent problems included inadequate air conditioning, roof leaks causing damage and mildew, pest and rodent infestation, unreplaced hallway lighting, lack of cleaning and maintenance, trash-filled parking areas, no hot water, and a multiday loss of electricity due to the landlord’s nonpayment.
- The premises also experienced burglaries and vandalism, raising security concerns.
- About fourteen months before the lease ended, the tenant vacated and stopped paying rent, asserting the premises were unsuitable for medical practice.
- The landlord sued for unpaid rent and restoration costs; the tenant asserted defenses including material breach, void lease, and breach of an implied warranty that the premises were suitable for a medical office.
- A jury found the landlord materially breached the lease and that defects made the premises unsuitable; the trial court denied the landlord recovery and awarded the tenant relocation-related damages.
- The court of appeals reversed and awarded the landlord rent for the remainder of the term.
- The Supreme Court of Texas granted review to determine whether Texas recognizes an implied warranty of suitability in commercial leases and to resolve the parties’ remedies.

## Issues

1. Whether Texas law recognizes an implied warranty of suitability in commercial leases that the premises will be suitable for the tenant’s intended commercial purpose.
2. If so, whether the landlord’s failures concerning essential facilities and promised services breached that warranty and materially breached the lease, excusing the tenant from paying future rent.

## Decision

- The Supreme Court of Texas recognized an implied warranty of suitability in commercial leases.
- The Court held the warranty applies to latent defects in essential facilities and to defects in areas or systems the landlord agreed (expressly or by implication) to maintain or repair.
- The Court concluded the landlord’s failures—considered in the aggregate and tied to promised building services—rendered the premises unsuitable for use as a medical office.
- Because the landlord’s breach went to suitability and constituted a material breach, the tenant was excused from paying rent for the unexpired term after vacating.
- The Court reversed the court of appeals’ award of future rent to the landlord and reinstated the result denying the landlord that recovery, while maintaining the tenant’s ability to recover relocation-related damages consistent with the trial court’s judgment.

## Legal Principles

- A commercial landlord impliedly warrants that leased premises are suitable for their intended commercial purpose at the inception of the lease and will not be rendered unsuitable by defects the landlord must remedy.
- The implied warranty of suitability covers latent defects in essential facilities and defects in facilities or services within the landlord’s control that the landlord has agreed to provide or maintain.
- The warranty is not an absolute guarantee against all defects; it targets defects that materially impair the premises’ intended commercial use.
- A landlord’s material breach that makes premises unsuitable may justify the tenant’s termination of performance, including cessation of future rent obligations, and may support tenant damages such as relocation expenses and lost time.

## Conclusion

Texas commercial leases include an implied warranty that premises will be suitable for their intended commercial use, and a landlord’s failure to correct serious defects in essential, landlord-controlled facilities can constitute a material breach that excuses a tenant from paying future rent and permits recovery of resulting damages.


Davidow v. Inwood N. Pro. Grp.-Phase I, 747 S.W.2d 373 (Tex. 1988)