In a ruling issued on April 11, 2025, the Supreme Court of Alabama reversed a trial court’s decision that had invalidated a commercial lease between Hembree Insurance Trust and Maples Industries, Inc., restoring the trust’s ability to enforce its contract with the long-standing tenant.
The dispute arose from a lease agreement executed in February 2019, under which Hembree Insurance Trust leased a 135,847-square-foot industrial building in Scottsboro, Alabama, to Maples Industries for a five-year term running from January 1, 2020, through December 31, 2024. The lease obligated 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 for several years before the 2019 lease, having initially leased it from Hembree in 2011 and renewed 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. It argued that the lease was void because Hembree did not hold legal title to the property at the time the lease was signed.
In support, Maples presented a 2014 warranty deed showing that Hembree had transferred ownership of the property to Woods Cove Industrial Property, LLC. The Jackson Circuit Court agreed, 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, not being the titled owner, had no authority to lease the property.
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. In support of its position, Hembree submitted Woods Cove’s articles of organization and operating agreement. These documents confirmed that the LLC had been formed in 2014 for purposes including leasing property, and that Hembree, as the sole member, was empowered to act as its agent and manage its affairs.
The Alabama Supreme Court agreed with Hembree and reversed the lower court’s judgment. The justices noted that Alabama law does not require a lessor to hold title in order to lease property. What is required is lawful possession or authority, and a party may validly lease property even when title is held by another, provided the lessor possesses some legal interest or authority in the land.
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. Moreover, under established Alabama law, a tenant in possession may not dispute the landlord’s title. This doctrine of estoppel, codified in Alabama Code § 35-9-1 and supported by a century of caselaw, prohibits tenants from challenging a landlord’s right to lease once possession has been accepted under the lease.
The Court also rejected Maples’s argument that there was no “meeting of the minds” as to ownership. The Court found that Maples’s execution of the lease and continued possession under it established clear assent. Although Maples raised the issue of possible lack of mutual understanding, the Court held that whether the ownership issue might support a separate claim - such as fraud, misrepresentation, or mistake - was not before the Court and would not be addressed.
Because the trial court had granted summary judgment without resolving factual issues regarding Hembree’s leasing authority and Maples’s acceptance of the lease terms, the Alabama Supreme Court found that the judgment was in error. It reversed the decision and remanded the case for further proceedings.
No insurance policy terms or coverage clauses were discussed in the opinion. The case turned entirely on questions of contractual authority, legal estoppel, and the enforceability of a lease executed by a trust-controlled entity.
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.
The case is Hembree Insurance Trust v. Maples Industries, Inc., SC-2024-0543, on appeal from the Jackson Circuit Court, case number CV-24-900026.
