Letters Between Owner and Tenant Weren't a Lease Renewal

A lease included an option to renew on terms “mutually agreeable to the parties.” Before the lease ended, the owner and tenant started to negotiate the terms of the lease renewal through a series of letters. The lease ended, but the renewal negotiations continued and the tenant stayed in the space, continuing to pay rent. A new lease was never signed, so the tenant moved out. The owner then sued the tenant, claiming that the letters were sufficient to establish a binding lease renewal.

A Minnesota appeals court ruled that the letters didn't constitute a lease renewal. The court pointed out that “every letter ended with at least one unresolved term.” Since the owner and tenant never agreed to the terms of the lease renewal, or agreed to be bound to the partial terms on which they did agree until a complete agreement could be reached, there was no binding renewal. So the court dismissed the case [Stoneburner v. Dubow].