Alabama Supreme Court Reverses Lower Court Decision in Commercial Lease Dispute
The Alabama Supreme Court has ruled in favor of Hembree Insurance Trust in a commercial lease dispute with Maples Industries, Inc., reversing a lower court’s decision that had invalidated the lease agreement. The Supreme Court’s ruling, issued on April 11, 2025, restored the trust’s ability to enforce its contract with the long-standing tenant.
The dispute centered on a lease agreement executed in February 2019, where Hembree Insurance Trust leased a 135,847-square-foot industrial building in Scottsboro, Alabama, to Maples Industries for a five-year term from January 1, 2020, to December 31, 2024. The lease required Maples to maintain the property, including a clause specifying that Maples would be responsible for the replacement or repair of the roof, while Hembree would cover “50% of agreed upon roof replacement or agreed upon major repair costs.”
Maples had been in possession of the property since 2011, initially leasing it from Hembree and renewing the lease in 2014. However, after Hembree initiated a lawsuit on March 3, 2024, claiming that Maples had failed to repair or replace the roof as required under the lease, Maples moved to dismiss the case. Maples argued that the lease was void because Hembree did not hold legal title to the property at the time the lease was signed, presenting a 2014 warranty deed showing that Hembree had transferred ownership to Woods Cove Industrial Property, LLC.
The Jackson Circuit Court agreed with Maples, treating the motion to dismiss as a motion for summary judgment and ruling that the lease was “null and void in all respects” since Hembree was not the titled owner. On appeal, Hembree contended that it was the sole member and manager of Woods Cove and had full legal authority to lease the property on its behalf, supported by Woods Cove’s articles of organization and operating agreement.
The Alabama Supreme Court agreed with Hembree, noting that Alabama law does not require a lessor to hold title to lease property. The Court emphasized that Hembree had placed Maples in possession, accepted rent, and fulfilled the role of lessor, and that Woods Cove’s documents explicitly gave Hembree leasing authority. The Court also applied the doctrine of estoppel, codified in Alabama Code § 35-9-1, which prohibits tenants from challenging a landlord’s right to lease once possession has been accepted under the lease.
The decision clarifies the legal standing of insurance trusts and their affiliated entities in managing commercial real estate leases. For insurance professionals, particularly those involved in trust and property administration, the ruling reinforces the enforceability of leases entered into by trusts acting through properly organized LLCs, even when the trust itself is not the titleholder.
