Daily Development for
Wednesday, April 16, 1997

by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law

LANDLORD/TENANT; SUBLEASES; RIGHTS OF SUBTENANT; RENEWAL OF SUBLANDLORD'S LEASE: Where sublease states that it is specifically subject to terms of master lease, sublessor has no duty to exercise option to renew master lease in order to accomodate subtenant's option to renew sublease. Tiger Crane Martial Arts, Inc. v. Franchise Stores Realty, 652 N.Y.S.2d 674 (Sup.Ct. 1997)

The sublease was for only a portion of the area leased under the master lease, but the court assumed for purposes of analysis that the sublessor would have been able to exercise its renewal option only for that area subleased here. Nevertheless, the court viewed it as "well settled" that where the sublease expressly provides that it is subject to the terms of the master lease, the subtenant has no right to require the sublessor to exercise its own option to renew in order to faciltitate the subtenant's exercise of its own option.

Comment 1: The single case that the court relies upon for its "well established rule," Minister, Elders & Deacons of Ref. Prot. Dutch Church of City of N.Y. v. 198 Broadway, 464 N.Y.S. 2d 406 (N.Y. 1983) involved a situation in which the sublandlord would have been required to renew a lease of substantially more space than that leased to the subtenant. The court also discussed other business considerations, but, as a strong dissent points out, these considerations actually militated in favor of recognizing that the sublessor sufferred no loss from renewing its master lease, even with the extra space. In any event, the instant case is distinct from the Dutch Church case because of the fact that the sublessor in the instant case could have renewed only the portion of the property leased to the subtenant.

Comment 2: The editor is unconvinced that the language making the sublease subject to the master lease really means anything. It simply restates the obvious. The real issue is the probable intent of the parties taking into account all the facts and circumstances. The editor would view the granting of an option to renew the sublease as a commitment by the landlord to have the property available to be subtenant. The parties should be required to state expressly if this is not their intent. Instead, here, the court requires the tenant to demand language expressly indicating that the landlord is required to renew. A brief survey by the editor of leasing lawyers in Kansas City indicates that the intuitive reaction of these professionals is that the landlord probably had the duty, suggesting that this logical position ought to be the "default" reading of the relationship of the parties. Compare: Hebert v. Hines, 615 So. 2d 44 (La. App. 1993) (Subtenant lacks the power actually to exercise the sublessor's option to extend).

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