LEASE RENEWALS
Court Finds No Ground to Excuse Commercial Tenant’s Failure to Give Required Notice of Renewal

In Baygold Assocs., Inc. v. Congregation Yetev Lev of Monsey, Inc., 19 N.Y.3d 223, 947 N.Y.S.2d 794 (May 3, 2012; 4-2 decision), landlord L and tenant T contracted to lease premises used by T for a nursing home. That was in 1976. The term was 10 years with four additional 10-year renewal options available to T, provided T give L no fewer than 270 days notice before the expiration of each term, the notice to be “by certified mail with return receipt requested”.

Renewals were made extending the lease until 2005. Renewal thereafter was the issue. T’s attorney said he sent a timely renewal letter to cover the remaining two terms, but could produce no mail receipt or return card, as the contract required.

In 2007, L arranged to sell the property to D, the defendant here, whose attorney advised T that it would thenceforth treat T as a month-to-month tenant.

D is upheld; T’s suit to declare the lease properly renewed fails.

In its 1977 decision in J.N.A. Realty Corp. v. Cross Bay Chelsea, 42 N.Y.2d 392, 397 N.Y.S.2d 958, the Court held that it would recognize several grounds on which a commercial tenant might be relieved of its failure to timely renew, but the majority in Baygold, in an opinion by Judge Pigott, finds none applicable here. One would be a showing that the tenant would suffer a serious loss, which could be established, for example, if T had made substantial improvements in anticipation of the lease’s renewal. But whatever T did in that respect was done some 20 years earlier; more recent improvements were made by subtenants, not by T.

The dissent, written by Judge Smith, sees that as a distinction from the J.N.A. case, but one without a difference.