Reletting Damages Include “Landlord Work” and “Tenant Allowance” as “Costs of Alterations and Repairs” Under Commercial Lease Remedy Clauses

1. Introduction

In Brixmor GA Seacoast Shopping Center LLC v. NH1 Motorplex LLC & a. (N.H. Mar. 19, 2026), the Supreme Court of New Hampshire affirmed a superior court damages award arising from a commercial lease default. The plaintiff-landlord (Brixmor GA Seacoast Shopping Center, LLC) leased premises to defendant-tenant NH1 Motorplex, LLC for a go-kart business, secured by personal guaranties from Dan and Pamela Jennison. After COVID-era disruptions and failed termination negotiations, NH1 vacated and stopped paying rent in May 2021.

The central appellate issue was narrow but consequential in commercial leasing practice: whether the lease’s remedy provision allowing recovery of “costs of alterations and repairs” as part of reletting costs permitted the landlord to recover “landlord work” and “tenant allowance” expenditures incurred to attract and install replacement tenants.

2. Summary of the Opinion

The court affirmed the trial court’s ruling that “landlord work” and “tenant allowance” were recoverable as “costs of alterations and repairs” under Section 21.02(a) of the lease because they were reasonable and necessary costs incurred to relet the premises after the tenant’s default. The court held the trial court employed an objective, plain-meaning interpretation (including dictionary definition) and relied on evidentiary support that such expenditures were market-expected and required for mitigation through reletting—particularly where the premises had to be subdivided for two successor tenants.

3. Analysis

3.1. Precedents Cited

  • N.H. Fish & Game Dep't v. Bacon, 167 N.H. 591 (2015)
    The court used Bacon to frame deferential review of post-hearing factual findings on damages: findings and rulings stand unless unsupported by evidence or legally erroneous, and appellate review asks whether a reasonable person could reach the same decision. This deference mattered because the “necessity” and “market expectation” of tenant allowances/landlord work were heavily evidence-driven.
  • Bursey v. CFX Bank, 145 N.H. 126 (2000)
    Cited for de novo review of legal rulings and application of law to fact. The court separated (i) de novo contract interpretation from (ii) deferential review of the trial court’s factfinding about what the expenditures were and why they were incurred.
  • Tulley v. Sheldon, 159 N.H. 269 (2009)
    Establishes that lease interpretation is a question of law, reviewed de novo, and that leases are construed using standard contract interpretation principles. This underwrote the court’s approach: interpret the remedy clause as a contract term, not as an equitable afterthought.
  • McDonough v. McDonough, 169 N.H. 537 (2016)
    Supplied the governing method: give contractual language its reasonable meaning in context, read the document as a whole, and—absent ambiguity—derive intent from plain meaning. The court relied on this to approve use of ordinary meaning (including dictionary definitions) because “costs of alterations” was not expressly defined in the lease.
  • Pope v. Lee, 152 N.H. 296 (2005)
    Cited to reinforce that dictionary definitions are a permissible tool for discerning the plain meaning of a contract term. This supported the trial court’s definition of “alteration” and the Supreme Court’s approval of that approach as objective, not subjective.
  • Cloutier v. City of Berlin, 154 N.H. 13 (2006)
    Appeared in a footnote regarding the plain error rule. The court clarified that plain error review was inapplicable because the arguments were preserved. While not outcome-determinative, it signals the court decided the case under ordinary preservation and review doctrines rather than discretionary plain-error correction.

3.2. Legal Reasoning

(a) The contractual hook: Section 21.02(a) and reletting setoff mechanics.
Section 21.02(a) authorizes the landlord, after an event of default, to “make such alterations and repairs as may be necessary in order to relet the Demised Premises,” and to apply rents received from reletting first to non-rent indebtedness, then to “costs and expenses of such reletting, including ... costs of alterations and repairs,” and then to current rent— with the tenant liable for any deficiency if reletting rents are less than the rent due under the original lease. The parties did not dispute that reletting costs and “costs of alterations and repairs” are recoverable in principle; the dispute was whether “landlord work” and “tenant allowance” fit within that phrase.

(b) Plain meaning and objective interpretation, not “subjective” gloss.
Because “costs of alterations” was undefined, the trial court looked to a dictionary definition of “alteration” (from Black’s Law Dictionary) and concluded it encompassed substantial changes to real estate/structure not necessarily changing exterior structural dimensions. The Supreme Court approved this as consistent with New Hampshire contract interpretation: ascertain plain meaning from the language used, with dictionary definitions as an accepted aid (McDonough, Pope).

(c) Evidentiary support that the expenditures were reletting alterations.
The record showed “landlord work” meant work performed directly by the landlord; “tenant allowance” meant a dollar amount paid to the tenant instead of the landlord doing the work. Testimony established these were “reasonable and necessary” to bring replacement tenants into the space, and were market-expected retail leasing components. Importantly, the landlord’s mitigation required subdividing the premises for two successor tenants, which drove fit-up costs. The court treated these expenditures as functionally equivalent ways to fund the same category of physical improvements/fit-up needed to relet—thus falling within “costs of alterations and repairs.”

(d) Incentives vs. necessity: the mitigation-informed lens.
Defendants argued the expenditures were mere “incentives,” not necessary reletting costs. The trial court found (and the Supreme Court held the record supported) that refusing such market accommodations would likely have prevented or significantly delayed reletting, increasing damages—i.e., these were part of commercially reasonable mitigation. The court also noted NH1 itself received a comparable “tenant allowance” (called a “construction allowance”) to convert the space to its go-kart use, supporting the practical understanding that such allowances finance alterations needed for occupancy.

(e) Consequential damages theory left undecided.
Because the court affirmed recovery under Section 21.02(a)’s “costs of alterations and repairs,” it did not reach the alternative argument that these items were recoverable consequential damages.

3.3. Impact

1) Drafting and enforcement of remedy clauses.
The decision strengthens landlords’ ability to recover re-tenanting fit-up expenditures under broadly worded “alterations and repairs” language, even when the lease does not specifically list “tenant allowance” or “landlord work.” Parties should expect New Hampshire courts to treat allowance-funded improvements and landlord-performed work as substitutes, not categorically distinct buckets, when the evidence shows both were used to accomplish alterations necessary to relet.

2) Litigation proof: “necessity” is evidentiary and market-based.
The opinion signals that “necessary ... to relet” can include market realities (competitive leasing expectations), not only bare-minimum code compliance or physical restoration. Future litigants will likely focus on: (i) testimony about market practice, (ii) whether the work/allowance financed physical changes, (iii) whether the costs were reasonable in amount, and (iv) whether they were tied to mitigation (successful reletting).

3) Tenant risk allocation in defaults.
Tenants (and guarantors) face increased exposure where remedy clauses allow recovery of reletting costs: if the landlord can prove allowances and work were part of commercially reasonable steps to secure replacement tenants, those costs may be added to the deficiency calculation.

4. Complex Concepts Simplified

  • “Costs of alterations and repairs” (in a reletting clause): Expenses to change or fix the space so it can be leased again. Here, that included paying for improvements either by doing the work directly (“landlord work”) or by paying the new tenant to do it (“tenant allowance”).
  • Mitigation of damages: After a tenant defaults, a landlord generally must take reasonable steps to reduce losses (e.g., trying to relet). This case treats market-typical buildout contributions as potentially part of reasonable mitigation when needed to secure tenants.
  • “Deficiency” after reletting: The shortfall between what the defaulting tenant owed (plus permitted reletting expenses) and what the landlord actually received from replacement tenants, applied through the lease’s setoff formula.
  • De novo vs. deferential review: The Supreme Court independently reviews the meaning of contract terms (de novo), but it largely defers to the trial court’s factfinding on what happened and whether evidence supports it (as framed by Bacon).

5. Conclusion

Brixmor GA Seacoast Shopping Center LLC v. NH1 Motorplex LLC & a. confirms that, under a commercial lease remedy clause permitting recovery of “costs of alterations and repairs” as reletting expenses, New Hampshire courts may allow a landlord to recover both “landlord work” and “tenant allowance” expenditures when supported by evidence that they were reasonable, market-expected, and incurred to relet/mitigate after the tenant’s breach. The decision encourages careful lease drafting around reletting costs, and it underscores that “necessity” in this context can be informed by commercial leasing realities, not just physical minimalism.