Oral Agreement Validly Modified Lease Terms

A lease required the tenant to pay $6,500 per month. The lease also said that it could be renewed annually, with the rent to be renegotiated. The tenant notified the owner that it wanted to downsize its space. The owner orally agreed to change the lease term to month-to-month and reduce the rent to $4,500 per month.

Because the owner was very ill, he didn't put these changes in writing. The owner accepted the tenant's $4,500 rent checks. However, after the owner died, his wife argued that the lease hadn't been modified, and demanded that the tenant pay $6,500 per month. The tenant refused, and the owner's estate sued the tenant for the rent deficiency.

An Ohio appeals court ruled that the parties had validly entered into a new lease for a month-to-month term at a rent of $4,500 per month. The court said that the evidence (including testimony by the owner's son) showed that the tenant had met with the owner about changing the lease, the owner was mentally sound at the time, and the owner had orally consented to the reduced rent and new term.

Also, after the meeting the tenant sent the owner's attorney a letter indicating that it and the owner had made “a verbal agreement.” And the court noted that nothing in the lease barred the parties from entering into a new lease arrangement. Rather, the lease clearly permitted the renegotiation of rent.

• Estate of Arnold Tollett v. Multilink, Inc.: C.A. No. 06CA008866, 2006 Ohio App. LEXIS 4997 (Ohio Ct. App. 9/29/06).