Sublet Barred Tenant's Lease Extension

December 1, 2002

A lease gave the tenant an extension option. But the lease also said that “Tenant's rights under this option shall terminate” if it assigned the lease or sublet part of the space. The tenant sublet part of its space and later notified the owner that it was exercising its extension option.

In response, the owner asked for a rent increase, which the tenant refused. The owner evicted the tenant at the end of the original lease term. The tenant then sued the owner for violating the lease, claiming that it had exercised its extension option.

A lease gave the tenant an extension option. But the lease also said that “Tenant's rights under this option shall terminate” if it assigned the lease or sublet part of the space. The tenant sublet part of its space and later notified the owner that it was exercising its extension option.

In response, the owner asked for a rent increase, which the tenant refused. The owner evicted the tenant at the end of the original lease term. The tenant then sued the owner for violating the lease, claiming that it had exercised its extension option.

A Texas appeals court ruled that the tenant's exercise of the extension option wasn't valid because of the sublet. The court noted that the language of the extension option clearly said that the extension option would automatically terminate once the tenant signed a sublease. The lease didn't even require the owner to give the tenant any notice of termination or an opportunity to save the extension option by terminating the sublease, the court added [Zurita v. Lombana].

More like this