Business and Legal Insights

Leases often contain options to renew the lease between the landlord and tenant provided that specific conditions are met.  Options to renew can be worded in a variety of ways, but what may seem to be small semantic differences can have a dramatic difference in the meaning a court places on a particular clause. Where a lease says that the tenant shall have an option to renew for a specific period of time, but is silent as to all other terms, courts in Florida have ruled that the clause is understood to use the same terms and rent as the original lease. On the other end of the spectrum, where the option to renew sets out that the terms, period of time, and something like “rent shall be as determined by the parties at the time of renewal,” courts have ruled that the renewal clause is indefinite and, in turn, unenforceable. Courts have found that there is no “meeting of the minds” when the parties can’t agree on rent.

Notably, when a provision to determine future rent is ambiguous, but it can be inferred that the parties intended to have an agreement, courts can consider evidence of the parties’ intent and meaning of the terms.  If the parties are unable to reach an agreement as to the amount of renewal rent at the end of the existing term, the tenant becomes a “holdover tenant,” required by law to pay at least double the monthly rent (unless the lease says otherwise), and becomes a month-to-month tenant, subject to the landlord terminating the lease.  Accordingly, parties should include a method for calculating future rent in a lease if they want to be certain that a court will enforce the terms of a renewal agreement.