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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 had 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. The landlord, again represented by Jeffrey 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.

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