Summary:
The North Carolina Court of Appeals reversed summary judgment granted to the landlord, Paradigm Park, in a commercial lease dispute, finding that material questions of fact existed as to whether it had waived its right to collect rent by accepting mortgage and maintenance payments in lieu of rent for nearly four years. The Court also revived the tenant’s unjust enrichment counterclaim, reasoning that services provided outside the scope of the lease agreement might give rise to equitable compensation.
Commentary:
This case reinforces the viability of waiver by conduct as a defense in contract disputes, not just commercial leases. For debtors in consumer bankruptcy this ruling underscores that a creditor’s acceptance of alternative performance (e.g., partial or substituted payments) can defeat later efforts to retroactively enforce the original payment terms. This may also preclude lienholders from asserting that a default resulted merely due to the filing of a bankruptcy would, absent a reaffirmation and after accepting payments, and allowed repossession.
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