IRAC Analysis Fact Pattern
1. Andy leases to Burgertown Franchise Corporation a 10,000 square-foot building under a written lease with a twenty-year term, rent payable annually.
The lease includes a clause stating that Burgertown is responsible for making all necessary repairs, including rebuilding the structure after its destruction by any cause beyond Andy’s control.
The lease does not include a clause concerning its assignment. One day after the tenth rental payment, Burgertown, without Andy’s knowledge or consent, assigns its interest in the lease to Chicken Hut Restaurants, Inc. Meanwhile, Andy dies and Donna inherits Andy’s interest in the building. Without the knowledge or consent of either Burgertown or Chicken Hut, Donna sells the building to Eagle Investments, Inc. The next month, the building is destroyed in the flood of a nearby river. Burgertown rebuilds it and files a suit against Eagle for the expense. Eagle responds that the lease has terminated.
Is Eagle correct?
If so, when did the lease terminate? If not, is Eagle liable for the cost of rebuilding the structure? Why or why not?
