EMINENT DOMAIN --VALUATION OF LEASEHOLDS -- APPORTIONMENT OF AWARD BETWEEN LANDLORD AND TENANT IN LONG-TERM LEASE

Authors

Abstract

The Michigan Supreme Court had before it last fall a very unusual case involving the apportionment of a condemnation award between landlord and tenant. Only a portion of the leasehold premises was condemned. The lease still had approximately eighty years to run; it had no market value due primarily to the depression; and it constituted the sole assets of the lessee. The lease contained a clause. providing for rent abatement in case part of the premises was condemned. The lessors insisted that the lessee must be content with this rent abatement and that they were entitled to the whole award. On the other hand, the lessee contended that the lessors were entitled only to the present worth of the rentals on the part taken plus the present value of their reversionary interest in such part. The court, adopting a rule borrowed from a Massachusetts statute, ordered: (1) that the lessors be paid the present worth of their lost rentals; (2) that the residue of the fund be turned over to the lessors who were charged with payment of interest thereon to the lessee. This interest payment was to be credited on the rent, and if there was any excess, the lessee was to have a lien on the land for that amount. At the termination of the lease the principal of this residue was to belong to the lessor absolutely.

Recommended Citation

EMINENT DOMAIN --VALUATION OF LEASEHOLDS -- APPORTIONMENT OF AWARD BETWEEN LANDLORD AND TENANT IN LONG-TERM LEASE, 33 Mich. L. Rev. 1087 (1935).
Available at: https://repository.law.umich.edu/mlr/vol33/iss7/9