Leases can frequently be pretty complicated documents, with many provisions being downright confusing or incomprehensible, even to those of us with the requisite legal background and training. But of all the terms and conditions one typically finds in these documents, you would think the start and end date of a lease would be relatively easy to determine. Yet, regrettably, something as simple as when a lease agreement will expire is often the subject of protracted litigation.
By way of example, in Rachel Bridge Corp. v. Dishi, the first page of the "standard store lease" executed by the parties contained handwritten notations reflecting that the lease was for a 20-year term, beginning December 1, 1991 and ending November 30, 2011. Interestingly, paragraph 40 of the parties' agreement contained a twelve-year rent schedule which provided the tenant with the right to renew "for an additional eight years" at a delineated rate (that is, "the same rate specified in connection with the initial 12-year term set out in the rider").
Last time we checked, 12 + 8 = 20. So, if the renewal were properly exercised, the wording of paragraph 40 would be consistent with the term listed on the lease's cover sheet. And, no matter how you slice or dice it, it would appear that the parties did not intend the lease to extend beyond 2011. Yet, inexplicably, the Appellate Term, First Department, was left with the impression that the parties' agreement was "ambiguous" and that the wording raised a "question of fact" which required a formal hearing or trial. To complicate matters further, the appellate court suggested that the parties may have contemplated a 28-year term. As the court observed:
Given the lease ambiguity as to whether the parties intended a 12-year term with an eight-year renewal option, or a 20-year term with an eight-year renewal option...the dispute may not be resolved without the aid of extrinsic evidence.
While we accept that an "ambiguity" exists when a contract's language is susceptible to differing interpretations, and that it's the court's purview to resolve these kind of disputes (whether it be within the landlord-tenant context or otherwise), we respectfully submit that this case's outcome just doesn't add up.
For a copy of the Appellate Term's decision in Rachel Bridge Corp. v. Dishi, please click on the following link: