Landlord Tenant Attorney Examines Importance of Understanding Commercial Lease Terms

We recently represented a commercial tenant that the landlord attempted to evict. The landlord filed an unlawful detainer complaint based on the tenant’s failure to timely exercise the first of three five-year lease extension options. (By “timely exercise” we mean written notice from tenant to landlord of their intent to extend the lease, received by the landlord on or before the due date stated in the lease agreement.) This case has a specific aspect to it that created some doubt as to when notice was due: The commercial lease had been amended four times and extended by two years during the first five-year term.

PLP Gets Landlord and Tenant to Agree in Commercial Lease Dispute

The landlord argued simply that the lease had expired, based on the terms of the original agreement. We argued that as a result of the amendments, the option exercise date was ambiguous. We also argued that by continuing to accept rent after the original option exercise date the first option was “deemed exercised” (accepted by the landlord). Accordingly, waiver and estoppel prevented the landlord from requiring strict compliance with the notice provisions of the lease. We were able to negotiate a successful settlement that preserved the tenants right to possession on terms acceptable to the tenant and the landlord.

Put important contract dates on your calendar.

This case highlights the need for both landlords and tenants to have their commercial real estate attorneys carefully explain the terms of the lease as it relates to lease option terms, and for tenants to calendar the option exercise dates and strictly comply with the notice provisions.

In these times of escalating commercial rents, landlords may jump at the chance to evict a tenant that has locked in to a long term lease at below-market rents.  Given this, if the tenant neglects to provide timely notice of exercise of an extension option, strictly in compliance with the terms of the lease, they could be served unexpectedly with an eviction notice. Even a good-paying tenant may find itself facing eviction because it did not calendar the option exercise date, or worse, relied on informal verbal communication with the landlord rather than providing timely written notice as required by the lease.

Send an e-mail. Follow up with a letter.

Time-stamped e-mails are considered written communications, but the extra step of sending the landlord an old-fashioned letter is a great back-up that we recommend. Both should be sent with “delivery confirmation requested” to ensure the tenant can document that this critical message was received by the landlord.

Commercial Real Estate Attorney Urges Strict Compliance

Let a Bay Area commercial real estate attorney review leases, real estate transaction documents, and contracts ahead of time to keep abreast of the responsibilities and requirements that you must meet to avoid spending time and money on litigation due to avoidable mistakes. Poniatowski Leding and Parikh Law Corp. has the knowledge and experience to guide you or your business through property related litigation.