The Law

Biloxi Blues for Booted Tenant by Ron Davis Failure to abide by the terms of lease renewal has forced a tenant at a Mississippi shopping center to relinquish his premises, much to the obvious delight of the center’s owner. The shopping center, located in Biloxi, has leased space to the tenant since 1980. And it was the negligence of the tenant to observe the terms of that lease that has resulted in his eviction. Those lease terms allowed the tenant to operate his business at the center for five years. The lease also contains options to renew the contract for three successive terms of five years each. Those options are spelled out in separate lease sections for each renewal. To exercise each renewal option, the tenant must give the center’s owner 90 days notice in writing. The base monthly rental is then adjusted annually to reflect changes in inflation, as determined by the federal government’s Consumer Price Index. The tenant duly renewed after the initial term ended. Similarly, in 1990, the tenant adhered to the lease terms in renewing again. Then in 1991, the tenant assigned the lease, with the shopping center’s consent, to a third party, who continued operating the tenant’s business. But when time came to renew the final lease option in 1995, neither the tenant nor the assignee notified the center’s owner of their intentions. Yet the assignee continued to occupy the premises, and the shopping center owner accepted the rent (with an inflation adjustment) as though the lease had been renewed. The third renewal term expired in 2000, and again neither the tenant nor the assignee gave notice of their wish to renew the lease. The shopping center owner subsequently ordered them to vacate the premises. The tenant responded by suing the shopping center owner. He argued that by not requiring a written notice of lease renewal in 1995, the owner waived any further written renewal notices. A Mississippi appellate court rejected that argument, explaining, “Each of the five renewal options is separately set forth in individually numbered sections of the lease and amendments. The terms and conditions are repeated in each section. Not following the correct procedure under the option for the third renewal term did not constitute a waiver of the requirements under a fourth renewal term…. The shopping center owner was within his rights in terminating the leasehold rights.” (Taranto Amusement v. Mitchell Assoc., 820 So.2d 726 [Miss.App. 2002]) Decision: June 2002 Published: September 2002