Opinion ID: 1250062
Heading Depth: 1
Heading Rank: 3

Heading: RENEWAL vs. EXTENSION

Text: The legal distinction between an option to renew a lease or the lessee's right to extend a lease is often overlooked in case law. In the present case, the document uses the term renewal. However, the language of the lease is not solely determinative. In Massachusetts, one state which honors the distinction, the rule is that [a]n option to renew requires that a new lease be executed `or a formal extension of the existing lease, or something equivalent thereto.' Anderson v. Lissandri, 19 Mass. App. 191, 472 N.E.2d 1365, 1367 (1985) (quoting Leavitt v. Maykell, 203 Mass. 506, 509, 89 N.E. 1056 (1909)). An option to extend a lease for a definite period of time requires no further act by the parties so long as the lessee complies with the terms of the option to extend the lease. Id. In Anderson, the lease included the phrase option to renew which the court termed some evidence of the parties' intent. Id. However, the court said the use of the word renewal in a lease provision was not enough to prevent the court from construing the provision as an extension where an extension is shown by the circumstances intended by the parties. Id. The court found that the use of option language calling for renewal upon the same terms and conditions as the original lease really created an option to extend a lease rather than option to renew. Id. The court was persuaded that the parties did not contemplate renegotiation or the drafting of a new lease. In Weller v. Dalzell, 375 P.2d 467, 470 (Wyo. 1962), the court determined that a lessor, by his conduct, may acquiesce in the extension of a lease even though a new written lease is never executed. The distinction between Weller and the case here is that the operative word in the Weller lease was extend while the instant lease uses the word renew. Courts have generally held that while an extension continues the original lease, a renewal requires a new lease. Unity Investors Limited Partnership v. Lindberg, 421 N.W.2d 751, 754 (Minn.App. 1988). See Gibbs Realty and Investment Corp. v. Carvel Stores Realty Corporation, 351 Mass. 684, 223 N.E.2d 534, 535 (1967). We will consider whether a renewal will be inferred if the tenant performs all the conditions necessary to exercise his option, despite the fact that there is no new written lease. Some courts have applied a further distinction between renewal and extension to the effect that in an extension, a tenant exercises his option merely by holding over and paying his rent, while the renewal tenant must exercise his option by an affirmative act, though that act may be less than a formal execution of a new lease. Kozy Theatre Co., 231 S.W. 249; 50 Am.Jur.2d Landlord & Tenant, § 1181 (1970). Generally, the affirmative act consists of giving the appropriate notice under the renewal provision. Courts have held that, if the tenant effects the notice provision as specified, the renewal is enforceable even without a new written lease. Altman v. Alaska Truss and Manufacturing Co., Inc., 677 P.2d 1215, 1221 (Alaska 1983); McCutchin v. SCA Services of Arizona, Inc., 147 Ariz. 234, 709 P.2d 591, 593 (1985); Khourie Brothers, 300 S.W. at 614; Kozy Theatre Co., 231 S.W. at 251; Gibbs Realty and Investment Corp., 223 N.E.2d at 534-35; Unity Investors Limited Partnership, 421 N.W.2d at 754; Cassinari v. Mapes, 91 Nev. 778, 542 P.2d 1069, 1071 (1975); Jador Service Co. v. Werbel, 140 N.J. Eq. 188, 53 A.2d 182, 184 (1947); Upland Industries Corporation v. Pacific Gamble Robinson Company, 684 P.2d 638, 641 (Utah 1984). The fact that the renewal provision calls for renegotiation of the rent does not affect the enforceability of the renewal once the tenant has exercised his option. Altman, 677 P.2d at 1221; Cassinari, 542 P.2d at 1071. In addition to the tenant's proper exercise of the option, the landlord's depositing the rental checks created an acceptance of the offer to renew the lease, although there is no new written lease. Fun Products Distributors, Inc. v. Martens, 559 P.2d 1054, 1058 (Alaska 1977); Prince Enterprises, Inc. v. Griffith Oil Co., Inc., 8 Kan. App.2d 644, 664 P.2d 877, 882 (1983). We note that Double S asserted in its brief that some of the checks were not cashed. Acceptance of rent, even when the checks are held and not cashed is evidence that Double S recognized the extension or renewal of the lease. Doubledown Realty Corp. v. Gibbs, 122 Misc.2d 32, 469 N.Y.S.2d 887, 889 (1983). A renewal provision becomes enforceable once the tenant has exercised the option because the option itself constitutes part of the consideration of the original lease. Cassinari, 542 P.2d at 1071. The use of the word renewal in the lease is often not conclusive as to whether a renewal or an extension is intended, especially if the conduct of the parties lends credence to the notion that they intended to continue pursuant to the old lease. Gibbs Realty and Investment Corp., 223 N.E.2d at 535; Jador Service Co., 53 A.2d at 184. If the lease fails to specify that a new lease is required, then the tenant's actions in giving notice and paying rent will be found adequate to support a renewal. Jador Service Co., 53 A.2d at 184. If the tenant has complied with every condition of the renewal clause, as in this case, then he has done all that is required of him in order to renew the lease. Id.; Khourie Brothers, 300 S.W. at 614; Kozy Theatre Co., 231 S.W. at 251.