Spell Out Renewal Rent — Don't Rely on Boilerplate Language

Boilerplate renewal and amendment agreements typically contain language indicating that the tenant’s obligations under the original lease survive and become obligations under the new arrangement. But they may also include contradictory language saying that the new lease “supersedes” the previous one. And when you put these clauses together, it could jeopardize rent payment and other tenant obligations from the original lease that you want to continue but don’t expressly spell out in the new lease.

Landlord Gets Burned

A New York landlord learned this lesson the hard way. The landlord negotiated a new lease with a tenant that still had two years left on its original lease that included a rent increase. Having reached an agreement, the landlord drew up the necessary paperwork, including a boilerplate lease imposing the higher rent but also stating that the tenant’s obligations under the previous lease would “survive and be deemed to be obligations hereunder.” But unlike the previous lease, the new lease didn’t mention that the tenant was also responsible for cost-of-living rent increases. So, the tenant stopped paying them when the new lease took effect, and the landlord sued. While acknowledging that the cost-of-living adjustments clause wasn’t in the new lease, the landlord contended that this was an obligation that “survived” and became part of the new lease.

But the court disagreed, citing another boilerplate provision in the new lease that undercut the “survival” clause—namely, the phrase indicating that the new lease “supersedes and takes the place of the prior lease.” Since the new lease had contradictory terms and didn’t specifically mention the cost-of-living increases, the court read it against the party that wrote it, the landlord. Result: The “supersedes” clause trumped the “survives” clause, and the tenant didn’t have to pay the cost-of-living increases [Sea & Sky Garden, Inc. v. Vazem Corp.].

Takeaway

Don’t rely on “survival” clauses to carry over rent payment and other tenant obligations from a previous lease. Instead, make sure the new lease includes all of the obligations you want to survive and become tenant obligations under the new lease.