by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law
LANDLORD/TENANT; DEFAULT; WAIVER: Landlord's waiver of right to object to violations by tenant during original lease precluded landlord from relying on those same grounds to deny renewal for additional term.
Vice v. Leigh, 670 So.2d 6 (Miss. 1995).
The Mississippi court notes a distinct split in the jurisdictions on this point, which is a case of first impression for Mississippi. It cites cases in Nevada and Alabama holding that failure to terminate a lease due to tenant's defaults does not preclude a landlord from raising the same defaults in connection with tenant's attempt to exercise a renewal right that requires by its terms that tenant not have defaulted on the existing lease. It also cites cases in Illinois and Washington holding to the contrary, and elects to follow these latter cases.
The court points out that to hold otherwise would permit a landlord to lead a tenant into believing that the landlord was not objecting to certainof tenant's actions, deliberately waiting until the renewal period to "spring the trap" and deny renewal, which could be of far greater consequence to the parties than the impact of any of the alleged defaults.
In this case, for instance, tenant had sublet without landlord's prior consent - a violation of the specific language of the lease. Landlord, however, had knowledge of the sublet and failed to object for two years. Then, at or near the time for renewal, Landlord raised objection for the first time. Here it does not necessarily appear from the quoted evidence that Landlord had been "sandbagging," but simply that Landlord became disenchanted with the sublet tenant. Nevertheless, Tenant, of course, had proceeded on a course of conduct for several years in the expectation that Landlord was raising no objection to the subtenant.
Comment: Although it is clear that landlords might well want to object at renewal time on the basis of defaults that had been tolerated during the initial term, the court's point about the tenant's reliance on landlord's acquiesence is well taken. It is not uncommon for tenants to violate many provisions of a long term lease with the landlord's acquiesence and even encouragement. In such cases, it seems inappropriate to punish the tenant later by denying contract renewal rights. And it also will be difficult to sort out those waiver situations in which the landlord might arguably have a good basis for arguing that it has not waived renewal rights from this in which there is no such argument available. Certainly to bar the landlord from raising the issue of waived defaults at renewal time work be an injustice to some landlords in some cases, but the benefits of a clear rule, reflecting the most common circumstances, will be of benefit to the parties in the long run.
Items in the Daily Development section generally are extracted from the Quarterly Report on Developments in Real Estate Law, published by the ABA Section on Real Property, Probate & Trust Law. Subscriptions to the Quarterly Report are available to Section members only. The cost is nominal. For the last five years, these Reports annually have been collated, updated, indexed and bound into the Annual Survey of Developments in Real Estate Law, volumes 1-5, published by the ABA Press. The Annual Survey volumes are available for sale to the public. For the Report or the Survey, contact Laprica Mims at the ABA. (312) 988 6233 or LaPricaMims@abanet.org
Items reported here and in the ABA publications are for general information purposes only and should not be relied upon in the course of representation or in the forming of decisions in legal matters. Accuracy of data and opinions expressed are the sole responsibility of the DIRT editor and are in no sense the publication of the ABA.