Leasing and Property Newsletter – June 2018
In this edition our team report on the following topics:
- What happens if a tenant exercises their option then subsequently the parties negotiate different terms and conditions?
- What happens if a tenant intends to exercise their option and negotiate different terms and conditions at the same time?
- Can a landlord watch a tenant refurbish a premises and then decide not to grant the lease?
The Carroll & O’Dea Leasing and Property Team
Valid exercise of option or abandonment
What happens if a tenant exercises their option then subsequently the parties negotiate different terms and conditions? This recent Supreme Court case decided whether the lease arising out of that option had been abandoned by the tenant by negotiating the terms of a new lease (substantially different to the option lease) over a long period of time. In this case, the Court found the protracted negotiations did not mean the tenant had abandoned the option lease.
Intention to exercise option and re-negotiation
This case also was about an exercise of an option and subsequent negotiation. Here, the lessee seems to exercise its option, but also asks for a longer term and some other changes. A rent review process commenced which was not resolved. The Lessee purchased an alternate premises and moved their business. They argued that they had not exercised the option and were only holding over on a month-to-month basis. In this case, the Court found that the option had not been exercised.
Can a landlord watch a tenant refurbish a premises and then decide not to grant the lease?
We previously reported about this case in the Tribunal where an estoppel was granted ordering the landlord to execute a lease. Even though no commencement date was agreed, the landlord had agreed to grant a lease and provided draft documents to the tenant. The tenant promptly executed these and began renovating the premises. The landlord did not indicate to the tenant that they did not intend to execute the lease, and watched the tenant spend money renovating the premises. Both parties have appealed the decision.