Tenant Exercised Cancellation Right When It Gave First Notice of Intent to Do So

A tenant had a “one-time-only” right to cancel its lease. To exercise that right, the tenant had to send the owner written notice of its intent to cancel its lease. The tenant sent the owner notice of its intent to exercise its cancellation right. But instead, the tenant and owner amended the lease, and the tenant later exercised its renewal option. The tenant again sent the owner notice of its intent to exercise its cancellation right. But the owner argued that the tenant had already exercised its one-time-only right.

A California appeals court ruled that the tenant had exercised its cancellation right when it sent the owner the first notice of its intent to do so. The court rejected the tenant's argument that because it gave notice only of its intent to cancel the lease, but never actually cancelled the lease, it hadn't “used up” its one-time-only right. The tenant's interpretation would lead to “untenable” results—that is, the owner wouldn't know until the date given in a cancellation notice whether the tenant would actually cancel its lease and move out, the court noted. And such a result is “harsh, unjust, and would place one party at the mercy of another,” the court added [Salvio Pacheco Square, LLC v. Secure Computing Corp.].