Wanna a play "judge" for a few minutes? (Let's see how you would do.)
In 401 W. 14th St. Fee LLC v. Mer Du Nord Noordzee, "unambiguous" language in a lease made it up to the Appellate Division, First Department, for interpretation. While the excerpted provision is relatively short, you may want to read it a few times before answering the questions that follow. (Be forewarned: It's a bit tricky.)
In this particular dispute, the parties' lease agreement permitted the landlord to prematurely terminate the tenancy in the event the owner:
determines that it must reoccupy said premises in preparation or furtherance of a bona fide sale or redevelopment of the entire property into residential use [emphasis in original].
The question presented to both the New York County Supreme Court and Appellate Division was under what conditions the lease could be terminated. Did the provision apply if the building was going to be sold to any bona fide purchaser or was that acquirer required to convert the property to a residential structure?
What's your take?
It certainly reads as if the provision was conditioned upon a sale of the property to someone intending to convert the structure. And, that outcome would appear to make the most sense. (Why would a commercial tenant commit substantial resources to a space and readily agree to end its lease in advance of the original expiration date if the building was going to remain commercial in nature?) In this particular instance, however, both the New York County Supreme Court and the AD1 rejected that interpretation and decided that a conversion was not a necessary condition precedent:
We reject defendant's argument that the phrase "into residential use" modifies both "bona fide sale" and "renovation of the entire building," such that the condition to an early termination is either "a bona fide sale ... into residential use" or a "redevelopment of the entire property into residential use." Instead, we find that the use and placement of the word "or" makes the building's bona fide sale a condition that is separate from and alternative to its redevelopment for residential use.
And people poo-poo the importance of grammar! (Such are the perils of lease drafting.)
For a copy of the Appellate Division's decision in 401 W. 14th St. Fee LLC v. Mer Du Nord Noordzee, LLC, please click on the following link: http://www.nycourts.gov/reporter/3dseries/2006/2006_08178.htm