Can a tenant avoid paying rent when they prevent fulfilling lease conditions? Baxter v. Saunders Outdoor Advertising, Inc. Explained

In Baxter v. Saunders Outdoor Advertising, Inc., the Utah Court of Appeals addressed whether a tenant could avoid paying rent by claiming non-fulfillment of a condition precedent when the tenant may have caused the condition’s failure.

Background and Facts

John Baxter leased his building to Saunders Outdoor Advertising for billboard purposes. The lease required Saunders to remove an existing billboard and construct a new 14′ x 48′ sign. The lease stated that rent would commence “upon completion of the installation of the structure” and was “subject to Lessee obtaining state and local approval.” Saunders used the existing billboard for years without paying rent, never removed the old sign, and never obtained permits for the new billboard. Baxter sued for unlawful detainer.

Key Legal Issues

The central issue was whether Saunders could rely on the failure of the condition precedent (constructing the new billboard) to avoid paying rent when there were disputed facts about who prevented the condition’s fulfillment. The parties disagreed about whether Baxter interfered with Saunders’ permit efforts or whether Saunders failed to make good faith efforts to obtain permits.

Court’s Analysis and Holding

The court of appeals held that summary judgment was improper due to genuine issues of material fact. The court applied the principle that “no one can avail himself of the non-performance of a condition precedent, who has himself occasioned its non-performance.” The court found that if Saunders had a duty to make reasonable, good faith efforts to obtain permits but failed to do so, it could not rely on the condition’s failure to avoid paying rent. Conversely, if Baxter interfered with Saunders’ efforts, Saunders could properly invoke the failed condition precedent as a defense.

Practice Implications

This decision emphasizes the importance of clearly drafting lease provisions that specify which party bears responsibility for fulfilling conditions precedent. Ambiguous language about permit responsibilities can create factual disputes that prevent summary adjudication. The case also reinforces that parties cannot benefit from their own breach of the covenant of good faith and fair dealing by preventing condition fulfillment and then claiming the condition’s failure excuses their performance.