A Cautionary Tale in Drafting and Exercising Lease Renewal Options

September 20, 2022 Advisory

The Eastern District of the Missouri Court of Appeals recently issued an opinion on an unlawful detainer action involving a tenant who sought, and ultimately failed, to exercise an option to renew its lease term. (Green Street 2900 Investors, LLC v. The St. Louis Woodworks, Inc., No. ED110459 (Mo. App. E.D. Aug. 30, 2022) (Green Street).

The lease at issue in Green Street gave the tenant two renewal options, the second of which was to have a monthly rental rate at “market rate,” defined as “the lesser of rent quoted to prospective tenants within six (6) months prior to the expiration of the Lease term or rent paid by other tenants for comparable space within the surrounding area.”

The landlord and tenant later amended the lease to provide the tenant a renewal option which would have a monthly rental rate “at the current market rate as negotiated and agreed between Landlord and Tenant.” Emphasis added.

The tenant properly notified the landlord of its intent to exercise the option to renew the lease pursuant to this amendment. However, the parties did not reach an agreement as to the rental rate during the renewal term.

At the end of the then-current term, the landlord demanded the tenant vacate the premises. The tenant sued for specific performance and declaratory judgment, and the landlord subsequently filed suit for unlawful detainer. The subject of Green Street is the unlawful detainer action.

Unlawful detainer is when any person willfully and without force holds over any lands, tenements or other possession after the termination of the time for which they were demised or let to the person. RSMo § 534.030.1. The crux of unlawful detainer actions, and the Green Street decision, is the right to immediate possession.

The appellate court in Green Street determined that the landlord had the immediate right to possession. The court interpreted the above language of the renewal option in the lease amendment as requiring the parties to agree on a negotiated rental rate. The court equated this to an agreement to agree; and because real estate contracts require a price to be enforceable, the court determined that the renewal option was unenforceable. Since no contract existed for the renewal term, the landlord was entitled to immediate possession upon expiration of the current lease term.

Green Street serves as a reminder to tenants to include the basic building blocks of real estate contracts in all leases and lease amendments, and to be mindful of contract terms modified by later amendments, as such terms are key in properly exercising renewal options.

If you have questions or need assistance with a lease or amendment, please contact your regular AT lawyer or one of the authors listed below.

Contact Us
  • Worldwide
  • Boston, MA
  • Chicago, IL
  • Denver, CO
  • Dublin, Ireland
  • Edwardsville, IL
  • Jefferson City, MO
  • Kansas City, MO
  • Las Vegas, NV
  • London, England
  • Miami, FL
  • New York, NY
  • Orange County, CA
  • Philadelphia, PA
  • Princeton, NJ
  • Salt Lake City, UT
  • St. Louis, MO
  • Washington, D.C.
  • Wilmington, DE
abstract image of world map
Boston, MA
800 Boylston St.
30th Floor
Boston, MA 02199
Google Maps
Boston, Massachusetts
Chicago, IL
100 North Riverside Plaza
Suite 1500
Chicago, IL 60606-1520
Google Maps
Chicago, Illinois
Denver, CO
4643 S. Ulster St.
Suite 800
Denver, CO 80237
Google Maps
Denver, Colorado
Dublin, Ireland
Fitzwilliam Hall, Fitzwilliam Place
Dublin 2, Ireland
Google Maps
Edwardsville, IL
115 N. Second St.
Edwardsville, IL 62025
Google Maps
Edwardsville, Illinois
Jefferson City, MO
101 E. High St.
First Floor
Jefferson City, MO 65101
Google Maps
Jefferson City, Missouri
Kansas City, MO
2345 Grand Blvd.
Suite 1500
Kansas City, MO 64108
Google Maps
Kansas City, Missouri
Las Vegas, NV
7160 Rafael Rivera Way
Suite 320
Las Vegas, NV 89113
Google Maps
Las Vegas, Nevada
London, England
Royal College of Surgeons of England
38-43 Lincoln’s Inn Fields
London, WC2A 3PE
Google Maps
Miami, FL
355 Alhambra Circle
Suite 1200
Coral Gables, FL 33134
Google Maps
Photo of Miami, Florida
New York, NY
7 Times Square, 44th Floor
New York, NY 10036
Google Maps
New York City skyline
Orange County, CA
19800 MacArthur Boulevard
Suite 300
Irvine, CA 92612
Google Maps
Philadelphia, PA
2005 Market Street
29th Floor, One Commerce Square
Philadelphia, PA 19103
Google Maps
Philadelphia, Pennsylvania
Princeton, NJ
100 Overlook Center
Second Floor
Princeton, NJ 08540
Google Maps
Princeton, New Jersey
Salt Lake City, UT
222 South Main St.
Suite 1830
Salt Lake City, UT 84101
Google Maps
Salt Lake City, Utah
St. Louis, MO
7700 Forsyth Blvd.
Suite 1800
St. Louis, MO 63105
Google Maps
St. Louis, Missouri
Washington, D.C.
1717 Pennsylvania Avenue NW
Suite 400
Washington, DC 20006
Google Maps
Photo of Washington, D.C. with the Capitol in the foreground and Washington Monument in the background.
Wilmington, DE
1007 North Market Street
Wilmington, DE 19801
Google Maps
Wilmington, Delaware