INSTANT GRATIFICATION

A person or company who knows that they disagree with another about the meaning of a legal document may think they are in a bind.  How, just how, will that disagreement be resolved?

Let us imagine, for example, a commercial lease.  Let us further imagine that the document is not written as clearly as it could be – which sadly will not stretch the imagination too much. In this hypothetical, the length-and-termination provisions of the lease are ambiguous.  And so our hypothetical tenant thinks that it may get out of the lease on, say, each one year anniversary of signing a nominally 5-year lease.  It also knows the landlord will disagree.  What is such a tenant to do? Must it break the lease and wait for the landlord to sue, seeking large amounts of damages?

Thankfully, no.  The law of most (possible all) states and federal law allow for something called a Declaratory Action.  The tenant in our case may file suit asking for the Court to determine the parties’ rights under the lease,  so long as there is an actual controversy – in this case, the tenant actually wanting to move out.  There is no need to wait for a million-dollar lawsuit after maybe breaching the lease.

In Florida, there is an administrative equivalent to the Declaratory Action called the Declaratory Statement.  People or businesses who want to take a given action, and wonder whether a state agency would find that action permissible under the law that agency administers, may petition the agency for a determination that the action is (or is not) permissible.  An example from the early 90s had a landlord asking for a Declaratory Statement that sales tax did not apply to leases.

There is an additional advantage to Declaratory Statements besides a level of certainty.  The agency’s declaration is binding, and constitutes a final administrative order.  So if the agency allows the action, the declaration is binding on the State.  And if it does not, the agency statement may be appealed to the courts there and then.