Word 'Or' in Renewal Option Is Typo, Not Option to Renew Without Notice

What Happened: A lease stated: “Tenant shall have the right and option to extend the Term for one (1) three (3) year option, exercisable by giving Landlord prior written notice, at least six (6) months in advance of Expiration Date, or Tenant’s election to extend the term; it being agreed that time is of the essence. . .” (emphasis added).

The italicized language, especially the word “or,” was the focal point of a dispute about whether the three months of notice the tenant provided the landlord was a valid exercise of the renewal option. To the landlord, the clause clearly required six months’ notice; to the tenant, the word “or” made the clause ambiguous and gave the tenant the option to provide notice of less than six months. The court sided with the landlord.

Decision: The North Carolina appeals court upheld summary judgment for the landlord.

Reasoning: The word “or” was clearly a typo for what the parties intended to be “of.” Under the tenant’s theory that the “or” was deliberate, the clause would have given the tenant the choice between either six months’ notice and no advance notice at all. The court dismissed that as “nonsensical,” especially given the “time is of the essence” clause that followed. So, the court concluded that the “or” was just a mutual mistake and noted that the letter “r” is directly above the letter “f” on the standard keyboard.

• 4000 Piedmont Parkway Assocs., LLC v. Eastwood Constr. Co.: 2020 N.C. App. LEXIS 218