Appellate Division Finds That Equity Will Not Intervene To Relieve Commercial Tenant Of Its Failure To Timely Exercise A Lease Renewal Option: Adam Leitman Bailey, P.C. Victorious
A commercial tenant sought information on how to exercise
the renewal option in its lease. When informed by the landlord to the follow
the renewal provision in the lease, tenant failed to do so until after the
option date expired. When the landlord brought a holdover, the tenant argued
that its failure to renew was excusable and that equity should intervene to
relieve it of its failure to timely renew. After a trial, the Civil Court held
for the tenant. On appeal to the Appellate Term, the landlord, represented by
Adam Leitman Bailey, P.C., reversed and granted judgment to the landlord.
Thereafter, the Appellate Division granted the tenant leave to appeal.
Before the Appellate Division, the tenant claimed that it should be relieved of
its excusable failure to renew and that it would be severely prejudiced because
it had made costly improvements to the space. Landlord, again represented by
Mr. Metz, showed that the tenant's claims lacked the ring of truth and that the
landlord would be severely prejudiced because it had forfeited the ability to
gain a much higher rental for the space due to the tenant's holding over.
The Appellate Division agreed with the landlord, holding that "[w]hile the
failure to timely exercise the option to renew the lease may have been
inadvertent, the tenant has not established that a substantial forfeiture would
result if equitable renewal was not granted or that the landlord would not be prejudiced
by the renewal."
Jeffrey Metz of Adam Leitman Bailey, P.C. represented the property
owner in this case at the Appellate Term and Appellate Division.