Tenant Didn't Comply with Conditions of Renewal Option

July 31, 2004

A lease said that the tenant could exercise its renewal option if it “fully and timely performed all terms of the current lease.” The tenant failed to comply with the lease's insurance requirements. And at one point, the tenant was approximately $10,000 behind in rent, which it eventually paid. The owner notified the tenant that as it had failed to comply with the option's conditions, the lease would terminate at the end of the current term. The tenant held over on a month-to-month basis.

A lease said that the tenant could exercise its renewal option if it “fully and timely performed all terms of the current lease.” The tenant failed to comply with the lease's insurance requirements. And at one point, the tenant was approximately $10,000 behind in rent, which it eventually paid. The owner notified the tenant that as it had failed to comply with the option's conditions, the lease would terminate at the end of the current term. The tenant held over on a month-to-month basis. After the owner sold the center, the new owner sent the tenant a notice that it was terminating the tenant's month-to-month tenancy. The tenant refused to leave, claiming that it had exercised its renewal option. The new owner sued to evict the tenant.

A Washington appeals court ruled that the tenant couldn't exercise its renewal option because it hadn't complied with the option's conditions. The tenant had failed to comply with the insurance requirements, and its rent had been overdue on several occasions. “Rent eventually paid does not constitute rent ‘timely’ paid,” the court noted. Since the tenant was left with only a month-to-month tenancy, the new owner's eviction notice was proper, and the tenant had to vacate the space, the court said [Highway 9 Shopping Ctr., LLC v. Punuel, Inc.].

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