Lease Ended When Tenant Missed Renewal Option Deadline

A lease with a five-year renewal option required the tenant to notify the owner of its intention to exercise the option at least one year before the end of the lease. Nine months before the end of the lease, the tenant notified the owner of its intention to exercise the renewal option. The owner sent the tenant a letter confirming the lease renewal after the lease's termination date. Then the tenant told the owner it was canceling the lease and moved out. So the owner sued the tenant for violating the lease's continuous operations clause. The tenant argued that it was a month-to-month tenant when it moved out and that it had properly terminated the month-to-month lease.

A Louisiana appeals court ruled that the tenant hadn't violated the lease's continuous operations clause because it was a month-to-month tenant when it moved out. It said that the lease ended when the tenant failed to exercise its renewal option a year before the end of the lease, as required by the lease. And since the lease had already ended, the owner's attempted confirmation of the renewal was invalid, the court added [Sizeler Hammond Square Ltd. Partnership v. Gulf States Theatres, Inc.].