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Perpetual Leases

Perpetual Leases

Q: If my tenant’s lease contains an automatic renewal clause, does that mean I’m trapped in my lease forever?

A: Probably not, but it depends on how the lease is worded.

A landlord client came to me with a problem. He was stuck in a lease with an uncooperative tenant paying an unreasonably low rent, and he wanted to know how he could terminate or renegotiate the lease. The challenge? The lease contained a provision that allowed the tenant to renew the lease at the end of every lease term, meaning that the unfavorable terms could conceivably apply forever. And, while uncooperative, the tenant’s behavior didn’t rise to the level of a material default, which would allow for a valid termination of the lease.

When presented with such a situation, the Florida courts generally disfavor the concept of a lease that continues in perpetuity. They will try to avoid allowing such a situation to persist, unless the lease contains very specific language that shows the parties actually intended the lease to go on forever. For example, if a lease simply provides renewal upon timely notice from the tenant, the courts have taken the position that the parties have obligated themselves to only one renewal – and not endless – at the end of each successive term.

On the other hand, where a lease provides that it can be renewed for successive terms (noting the use of the plural “terms”), without specifying the number of successive terms or otherwise expressly providing that the lease was intended to potentially be renewable ad infinitum, the courts have taken the position that the parties have obligated themselves to only two renewals, and no more.

In either case, at the expiration of the final renewal term, the tenancy becomes “at will”, and is then subject to being terminated in accordance with Sections 83.01 and 83.03, of the Florida Statutes.

Under Section 83.01, when rent is due under the lease on a monthly basis, the resulting at-will tenancy will be month-to-month. In that scenario, under Section 83.03, notice of termination would need to be given not less than 15 days prior to the beginning of the next monthly period.

Gary M. Schaaf

Gary M. Schaaf

GSCHAAF@beckerlawyers.com

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JoAnn Nesta Burnett

jburnett@beckerlawyers.com

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