Tenant's Conversation with Employee Didn't Orally Modify Lease

Facts: An office building owner rented space to a media company. The tenant was permitted to vacate the space early, in the third year of the lease, provided that it gave 90 days’ written notice, returned the keys to the owner, and paid any outstanding rent and other charges. After two years, the tenant talked to the owner’s employee, asking to terminate the lease. The tenant owed back rent and other fees, but it gave the keys to the employee and moved out.

The owner found a new tenant. It sued the previous tenant for breach of contract.

Decision: A New York trial court ruled in favor of the owner.

Reasoning: The tenant claimed that it was permitted to move out because the employee had said so in its conversation with the tenant, which had “orally modified” the lease.

The court noted first that the tenant’s option to vacate the space early couldn’t be exercised until the third year of the lease. But even if the tenant had been able to terminate the lease in the second year, it hadn’t done so in accordance with the lease terms, including giving written notice and paying any outstanding rent.

The court also agreed with the owner that the lease hadn’t been orally modified for two reasons. First, the employee didn’t have the authority to consent to the tenant’s early surrender. Second, the lease itself required that any such agreement by the owner to accept a surrender be in writing, not given orally; delivery of the keys to any agent or employee could not operate as a termination.

• Trumbull Equities LLC v. City.Com Media LLC, March 2015