The Massachusetts Appeals Court recently ruled on a case involving a commercial lease dispute. At issue was the notice provision in the contract. While the provision was clearly not satisfied, the court nevertheless ruled that actual notice had been received, so the breach of contract was meaningless.
Commercial Landlord Nitpicks Over Delivery of Nonrenewal Notice
The facts of the case, Sourcing Unlimited, Inc. v. Cummings Properties, are straightforward. Cummings rented office space to Sourcing Unlimited, which does business under the name Jumpsource. The commercial lease automatically renewed every five years unless terminated by either party between six months and a year beforehand. Notice of nonrenewal of the lease had to be in writing and:
- Served by constable,
- Delivered to Cummings by certified or registered mail with return receipt requested and postage prepaid, or
- Delivered by a recognized courier service, with a receipt.
The lease agreement stated that “no oral, facsimile or electronic notice shall have any force or effect.”
11 months before the lease was to automatically renew, Jumpsource sent Cummings an email stating their intent to leave the premises and to not renew the lease. Cummings received it and responded to it, offering alternative office space that may fit Jumpsource's needs. However, seven months before the lease was to auto-renew, Cummings sent another email informing Jumpsource that the nonrenewal notice it had received was actually ineffective because it was not sent properly.
Jumpsource never sent a nonrenewal notice under the delivery terms in the lease agreement, vacated the premises, and then faced legal action over whether the lease had automatically renewed.
Appeals Court Favors Actual Notice Over Strict Contractual Reading
After the Superior Court judge ruled for Jumpsource in a summary judgment, Cummings appealed and the Appeals Court affirmed the ruling.
Even though the contract unambiguously laid out how the nonrenewal notice was to be delivered, the Appeals Court ruled that minor deviations from the process did not change the fact that Cummings had actual notice. Actual notice of the intent to terminate the commercial lease was, after all, what really mattered, and stipulating how that notice was to be delivered was nothing more than an attempt to ensure that actual notice was obtained.
The Appeals Court pointed to several similar cases where notice to renew or to not renew a lease was delivered incorrectly, but was nevertheless received by the appropriate parties:
- When a tenant exercised an option to renew the lease through certified mail, though the lease required it to be done through registered mail, it was still effective (Gerson Realty Inc. v. Casaly)
- A lease option was effectively exercised when delivered through Federal Express rather than through certified or registered mail (Computune, Inc. v. Tocio)
When actual notice was made, and there was no dispute that it was made, how it was delivered was “of no consequence.”
Massachusetts Business Lawyers at the Katz Law Group
While it may seem strange for courts to disregard contractual provisions, the reality is that contracts serve a purpose. When that purpose is satisfied, like when a commercial landlord learns that a tenant intends to leave at the end of the lease, but there is a technical violation over how that notice was made, judges are unlikely to let that minor breach get in the way.
The business attorneys at the Katz Law Group handle real estate issues by helping both commercial landlords and tenants in Massachusetts enforce the terms of commercial rental agreements or break commercial leases in ways that help everyone. Contact them online or call their law office at (508) 480-8202.