Commercial Lease Renewal Deadlines: Strict Compliance
If there was any question, tenants looking to renew commercial leases
should pay close attention to deadlines.
On January 31, 2006, Maryland's Court of Special
Appeals in Chesapeake Bank of Maryland v. Munro Muffler/Brake, Inc. issued an opinion
holding that a tenant who admittedly failed to give timely notice of an
option for lease extension lost the option. The tenant, Munro, was required
under the unambiguous terms of the lease to give notice at least ninety days
prior to the end of the lease. Unfortunately, due to Munro's admitted error, notice
was not provided until just over sixty days prior to the end of the
lease term. The landlord, Chesapeake Bank, refused the extension. The Court of
Special Appeals noted the clear terms agreed to by the parties.
The Court rejected arguments that equity (basic principles of
fairness) or a cure provision of the lease helped the tenant. Munro argued that the
default provisions of the lease allowed it to cure within twenty days. That twenty day
time period would, it argued, allow the option notice to be made timely. The Court,
rejecting the argument, noted that, "if failure to satisfy the notice
provision is a default that can be cured, the provision [regarding notice renewal by
an agreed deadline] itself is rendered meaningless." Opinion at p. 32.
