Tenant Exercised Option Despite No Written Notice

December 1, 2006

A law firm tenant occupied half of the sixth floor of a building. It got an option to expand into the remaining half of the sixth floor. When the remainder space became available, the tenant notified the owner orally that it would exercise its option to expand into the remainder space. However, it never gave the owner the required written notice exercising its option. The owner argued that the tenant had not properly exercised the option, so the owner tried to rent the remainder space to another tenant.

A law firm tenant occupied half of the sixth floor of a building. It got an option to expand into the remaining half of the sixth floor. When the remainder space became available, the tenant notified the owner orally that it would exercise its option to expand into the remainder space. However, it never gave the owner the required written notice exercising its option. The owner argued that the tenant had not properly exercised the option, so the owner tried to rent the remainder space to another tenant.

A New York appeals court ruled that the owner had waived its right to insist on a written option notice and that it could not rent the remainder space to another tenant. The waiver occurred because the owner did not insist on a written option notice for nearly 10 months after the tenant gave it the oral notice. Plus, the owner acted as if it had accepted the tenant's oral notice, and the tenant had relied on those actions.

Also, the owner's attempt to rent the remainder space to another tenant violated the lease because the owner did not give the tenant an opportunity to match the third party's rental terms, said the court.

  • Kenyon & Kenyon v. Logany, LLC: No. 9368-9368A, 2006 N.Y. App. Div. LEXIS 12829 (N.Y. Sup. Ct. App. Div. 1st Dept. 10/26/06).

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