In a recent appellate decision in Sourcing Unlimited, Inc. v. Cummings Properties, LLC, the Court considered whether electronic mail (email) communications from a tenant to its landlord constituted effective notice to invoke a nonrenewal option to prevent automatic five-year renewal of a commercial lease. Although the “notice” provision in the lease prohibited electronic notice.
Cummings Properties, one of the largest and more litigious commercial property landlords in the Northshore, included the following clause in their lease agreement:
“NOTICE. . . . Any notice from LESSEE to LESSOR under this lease shall be given in writing and shall be deemed duly served only when served by constable, or delivered to LESSOR by certified or registered mail, return receipt requested, postage prepaid, or by recognized courier service with a receipt therefor, addressed to LESSOR at [street address] or to the last address designated by LESSOR. No oral, facsimile or electronic notice shall have any force or effect. Time is of the essence in the service or any notice.”
However, the tenant in this case only emailed the accountant manager, in a timely manner, that they would not be exercising the MUTUAL lease extension clause. Cummings argued that since the lease specified acceptable methods of notice and expressly excluded other methods, including “electronic notice,” Jumpsource did not strictly comply with the plain terms of the lease, and thus the notice was insufficient as a matter of law.
As a general rule, option provisions are strictly construed such that Massachusetts courts typically do not look to claims of materiality with respect to their enforcement. However, Massachusetts courts have recognized limitations to the concept of strict compliance with options. Where the fact and timeliness of delivery were not in dispute, the differences between the manner of notice required and the notice provided were “of no consequence.” Gerson Realty Inc., 2 Mass. App. Ct. at 875. Written notice delivered by Federal Express, instead of by certified or registered mail as required by the lease, constituted timely and effective exercise of a lease option. Computune, Inc. v. Tocio, 44 Mass. App. Ct. 489, 493 (1998).
In the end the Court decided that the clear, timely, unambiguous written notice provided by the tenant and received and acknowledged by the landlord constituted effective notice. The Court did want to make clear in its decision that they “do not intend to suggest that any and all written communications of a party’s intent to exercise an option would be sufficient to satisfy the terms of that option. Likewise, we do not hold that an oral statement of a party’s intent to exercise an option would be sufficient (and indeed it would not be so) where the contract requires the notice to be in writing.”
Although in this matter, the notice was deemed sufficient, the Court wanted to make clear that may not always be the case. Giving notice is like tipping at a restaurant, it is always better to overdo than underdo.
If you want to be sure you prevent an automatic lease renewal, contact Sean Tiernan at sean@amcondolaw.com.
For a copy of the Decision [click here].
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