Lease Terminated Early Despite Tenant’s Late Fee Payment

A lease said that the tenant could terminate the lease early if it satisfied five preconditions. The lease also said that if the tenant terminates its lease early, it must pay the center a termination fee of six months’ base rent and percentage rent when it gives its termination notice. The tenant sent the center a termination notice and a check for six months’ base rent. The center told the tenant that because it had failed to pay six months’ percentage rent when it gave its notice, the lease wasn’t terminated early. The tenant then paid the six months’ percentage rent. But the center sued, asking a court to rule that the lease wasn’t terminated because the tenant had failed to pay the full termination fee at the time it gave notice of its early termination, as required by the lease.

A federal court in Ohio ruled that the lease was terminated early despite the tenant’s failure to pay the full termination fee at the time it gave notice. The court said that since the tenant had satisfied the lease’s five preconditions to early termination, its lease was terminated. The court noted that the lease didn’t include full payment of the termination fee as a precondition to early termination of the lease [Kennedy Mall, Ltd. v. Brown Group Retail, Inc.].