## Facts

- A tenant leased the first and second floors of a downtown commercial building for one year beginning December 1, 1991, at $3,000 per month, and also paid sums for a security deposit and an option to purchase.
- The written lease incorporated an earlier offer to lease stating the premises were accepted “as is” except the landlord had to repair a leaky roof and a freight elevator to “good working order.”
- When the tenant took possession, the roof still leaked and the freight elevator was completely inoperable; the elevator was important to the tenant’s antiques business because it was needed to move large items to the second floor.
- The landlord hired an elevator company but capped spending and instructed it to do only minimal work to make the elevator move, declined recommended repairs, and directed the company not to seek inspection or disclose the full scope of needed repairs to the tenant.
- The elevator operated only briefly and was repeatedly shut down by inspectors for safety violations; after mid-March 1992 it did not operate again.
- The tenant sued for declaratory relief regarding the landlord’s duty to repair; the landlord responded with a notice to pay full rent or vacate and counterclaimed for rent and possession.
- The trial court found the elevator had not been repaired to “good working order,” awarded the tenant the cost to complete repairs, and granted a rent abatement reflecting diminished rental value during periods of elevator inoperability.
- The landlord appealed the repair-cost and rent-abatement awards; the tenant cross-appealed aspects of the abatement amount and the awards of attorney’s fees and interest.

## Issues

1. Whether the tenant’s covenant to pay rent was dependent on the landlord’s covenant to repair the elevator to “good working order” when that covenant was a significant inducement to the lease.
2. Whether the tenant could recover as damages the reasonable cost to place the elevator in the contractually promised condition.
3. Whether rent abatement was an available remedy, and whether the trial court used an acceptable method to measure the abatement based on diminished rental value.
4. Whether the trial court properly awarded attorney’s fees and interest.

## Decision

- The Utah Supreme Court affirmed the judgment awarding the tenant both (1) the cost of repairing the elevator and (2) rent abatement for diminished value while the elevator was unusable.
- The court held the tenant’s duty to pay full rent was dependent on the landlord’s performance of an essential repair covenant that was a significant inducement to the lease and central to the tenant’s intended use.
- The court construed “good working order” to require lawful, safe operability, not merely that the elevator could move.
- The court rejected arguments that partial rent payments, or the lack of a finalized abatement agreement, waived the tenant’s right to seek abatement for the landlord’s material nonperformance.
- The court affirmed the trial court’s determinations on attorney’s fees and interest.

## Legal Principles

- In a commercial lease, the tenant’s covenant to pay rent may be dependent on the landlord’s performance of covenants that were a significant inducement to entering the lease or to the tenant’s purpose for leasing the premises.
- A landlord’s substantial breach of such an essential covenant can justify rent abatement proportionate to the diminished value of the premises during the period of impaired use.
- A promise to repair to “good working order” can be interpreted to require safe, code-compliant, and legally operable conditions, not minimal mechanical function.
- A tenant may recover damages measured by the reasonable cost necessary to achieve the contractually required repair when the landlord fails to perform.
- Partial rent tenders and preliminary discussions about abatement do not necessarily constitute waiver where the tenant consistently asserts the landlord’s repair duty and seeks appropriate relief.

## Conclusion

The court affirmed rent abatement and repair-cost damages where the landlord materially failed to provide an elevator in safe, legally operable condition as promised, treating the rent obligation as dependent on performance of a repair covenant that was central to the tenant’s bargain and intended use.


Richard Barton Enters., Inc. v. Tsern, 928 P.2d 368 (Utah 1996)