Does Email Notice of Nonrenewal Satisfy Lease Requirement for Notice by Certified Mail?

Just about every lease includes a provision specifying the methods landlords and tenants must use to provide notice to each other. Deviations from notice requirements are a common source of litigation, especially when notice is required to exercise a purchase, renewal, or other lease option. We know that oral notice generally won’t suffice when a lease specifically says that notice must be in writing. Beyond that, there are no bright line rules governing how far a party can go in straying from the lease notice rules.

But while each case is different, courts follow general principles along with a common approach of considering not only the wording but also the purpose of the notice requirement and whether the deviation in methods defeated that purpose. Consider the following scenario.  

THE LEASE

A manufacturing company signs a five-year lease for office space in April 2010. The lease provides for automatic renewal for another five years unless either party provides written notice of nonrenewal in the window between six and 12 months of the scheduled expiration date. In other words, the tenant must provide the landlord written notice between Dec. 1, 2015, and May 30, 2016, to prevent the lease from renewing. The lease also includes a general provision (Section 21) setting out rules for serving notice required under the agreement:

NOTICE

Any notice from LESSEE to LESSOR under this lease shall be given in writing and shall be deemed duly served only when served by constable, or delivered to LESSOR by certified or registered mail, return receipt requested, postage prepaid, or by recognized courier service with a receipt therefor, addressed to LESSOR at [street address] or to the last address designated by LESSOR. No oral, facsimile, or electronic notice shall have any force or effect [emphasis added].  

WHAT HAPPENED

In December 2015, the tenant approaches the landlord to explore the possibility of relocating in the building. Discussions ensue, but no agreement is reached. A month later (January 2016), the tenant’s VP of sales sends the landlord’s account manager an email stating that “we’ve decided to close the office when the lease ends in November 2016.” The account manager responds with his own email the same day, thanking the tenant for “the message” and reminding it to check the lease’s renewal and cancellation terms. “Such provisions may alter the lease end date or otherwise result in the lease not terminating on the date referenced above,” the email concludes.

In April 2016, the landlord sends a letter notifying the tenant that it doesn’t have adequate insurance and is in default of the lease. Cure the default, or we can declare an end to your occupancy.

What’s the point of taking out new insurance when we’re only going to be in the space for another six months, the tenant replies. The landlord’s response: We can’t accept your nonrenewal notice because you provided it by email. Send the nonrenewal notice via certified or registered mail by May 30 or we’ll consider the lease to be renewed for another five years and proceed accordingly.

The tenant never sends a nonrenewal notice by certified or registered mail and moves out of the building when the original lease term ends on Nov. 30, 2016. It also goes to court seeking a judgment declaring that it properly served legal notice to opt out of the five-year renewal; the landlord asks for a declaratory judgment to the opposite effect.  

QUESTION

Did the tenant properly exercise its nonrenewal option?

A.         Yes, because the emails gave the landlord effective notice of the tenant’s intent not to renew

B.         No, because it didn’t send the notice by certified or registered mail

C.         Yes, because email notice is a form of written notice

D.         No, because the nonrenewal right was an option requiring precise compliance with the lease’s notice provisions

ANSWER

A. The tenant properly exercised the nonrenewal option because its emails provided the landlord effective notice.

EXPLANATION

This scenario, which is based on a Massachusetts case called Sourcing Unlimited, Inc. v. Cummings Properties, LLC (102 Mass. App. Ct. 653, 2023 Mass. App. LEXIS 74, 2023 WL 3855534) is an excellent illustration of the general rules most states follow regarding what constitutes proper notice to exercise a lease option. The lease in this case clearly stated that notice had to be by certified or registered mail and that “electronic notice” was invalid. But while it didn’t meet the strict terms of Section 21, the court concluded that the email notice that the tenant sent to let the landlord know that it wasn’t renewing still had legal effect, noting that:

• The notice was in writing;
• The tenant provided the notice before the May 30 deadline;
• The landlord received and acknowledged the email, thereby providing the same proof of delivery as certified or registered mail; and
• The landlord understood from the email that the tenant had decided not to renew.

So, A is the right answer.     

WHY WRONG ANSWERS ARE WRONG

B is wrong because requiring certified or registered mail is a means to an end, not an end in itself. The larger purpose was to ensure that the party not renewing send the other side timely, written, clear, and documented proof of its decision. The email notice in this case checked all of those boxes. So, the fact that the tenant didn’t send it by certified or registered mail as required by Section 21 of the lease was no big deal.

C is wrong because while it’s true that intent to exercise the nonrenewal option had to be in writing, not just any writing would have sufficed. “We do not intend to suggest that any and all written communications of a party’s intent to exercise an option would be sufficient to satisfy the terms of that option,” the court explained. We’re only saying that “the clear, timely, unambiguous written notice provided by the tenant and received and acknowledged by the landlord” in this case constituted effective notice to invoke the particular nonrenewal option in this lease.

D is wrong even though most states do hold landlords and tenants to a higher standard of compliance when exercising a lease option. The option holder has a unilateral right. “In such circumstances it may not be too much to ask that a person seeking to … exercise option rights turn his corners squarely,” according to the court. The reason the tenant got away with what optionees don’t normally get away with is that the option in this case extended to both sides. The landlord, too, could have exercised the option not to renew. Even when the option is unilateral, courts in Massachusetts and other states also give optionees some leeway not to use the exact notification methods the lease requires, provided that the deviations are minor, nonmaterial, and not in violation of the crux of the option provision.