Object Quickly If a Tenant Makes a Renewal Mistake

If a tenant exercises a renewal option without following all the procedures or requirements set out in the renewal clause, object right away. Failure to speak now may mean that you’ll forever have to hold your peace. That’s because a court might determine that in keeping silent you evidenced your intent to give up the right to enforce the renewal clause’s original terms.

A Texas landlord learned this lesson the hard way. The case involved a 20-year lease on a store that gave the tenant a renewal option. The lease renewal clause required the tenant to give the landlord a guarantor’s consent for the renewal when and if it exercised the option. The tenant didn’t provide the required consent. But the landlord accepted the tenant’s rent and raised no objections to the renewal.

Five years later, the landlord changed its tune, insisting that the tenant had no right to be in the space and asking the court to declare that the lease had expired. But the court refused. The landlord had given up any right it had to object to the tenant’s faulty renewal, it concluded.

The fact that the lease included a no-waiver clause stating that a landlord’s failure to object to a past tenant violation doesn’t mean that it’s giving up its right to enforce the lease in the future made no difference to the court. Landlords can waive no-waiver rights by their actions. The landlord’s failure to speak up when the tenant didn’t provide the guarantor consent indicated an intent to give up the right to object to the faulty renewal, the court concluded [Winslow v. Dillard Department Stores, 849 SW 2d 862].