Contradictory Lease Led Tenant to Renew Improperly

September 30, 2004

An owner drafted a lease and rider. Handwritten notes on the lease indicated that its term was 20 years. But the rider suggested that the term was 12 years, and it gave the tenant an eight-year renewal option that had to be exercised by advance notice to the owner. Before the end of the 12th year, the owner told the tenant that the lease was expiring soon. The tenant immediately hand-delivered its renewal notice to the owner's office. After the 12th year ended, the tenant learned that the owner never saw its renewal notice, so it redelivered the notice to the owner.

An owner drafted a lease and rider. Handwritten notes on the lease indicated that its term was 20 years. But the rider suggested that the term was 12 years, and it gave the tenant an eight-year renewal option that had to be exercised by advance notice to the owner. Before the end of the 12th year, the owner told the tenant that the lease was expiring soon. The tenant immediately hand-delivered its renewal notice to the owner's office. After the 12th year ended, the tenant learned that the owner never saw its renewal notice, so it redelivered the notice to the owner. The owner sued the tenant for holding over in its space, claiming that the lease wasn't renewed on time or in the manner required by the lease, which called for delivery of the tenant's renewal notice by registered or certified mail.

A New York court ruled that the lease had been renewed. Although the owner interpreted the rider to give the tenant a 12-year term, the court noted that the rider didn't explicitly say that. Only the lease supplied an expiration date—and it indicated a 20-year term. Plus, while the rider discussed the renewal option, it didn't say how it should be renewed. The tenant's failure to renew on time in accordance with the lease “is excusable and was caused in part by a contradictory document,” prepared by the owner, the court explained [Rachel Bridge Corp. v. Dishi].

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