Opinion ID: 1154530
Heading Depth: 3
Heading Rank: 2

Heading: The Standard for Determining Reasonable Fair Market Rent Under Paragraph 10 of the Lease.

Text: In ruling on the summary judgment motions, the superior court held in part that in deciding what is a reasonable rent under paragraph 10 of the lease [s]imply arriving at the highest and best use of the property is not contemplated... . We hold that the court was correct in rejecting the highest and best use criterion as the applicable standard for the determination of reasonable rent under paragraph 10 and in holding that actual use of the premises is to be considered in ascertaining the fair market rental value of the premises. Here Ferguson constructed a filling station. This improvement was required to be approved by the City under paragraph 7 of the lease. Under paragraph 4 of the lease no sublease could be entered into by Ferguson without the written consent of the City. Given that the City had notice of Ferguson's intended use at the time of leasing and consented to the construction of a service station and subleasing of the property, it is apparent that the parties contemplated that the premises would be used for the purpose of operating a gas station. Thus, we conclude that the superior court did not err in its adoption of the fair market value of equivalently used property as the standard to be employed in determining fair market rental value under paragraph 10 of the lease. [7]