Multiple Late Payment of Rent Precludes Renewal of Lease or Exercise of Option to Purchase Premises

In Illiria, Inc. v Pinebrook Plaza, LLC, an unpublished Michigan Court of Appeals opinion, a tenant’s lease included an option to purchase if exercised during the initial lease term or any renewal.  The lease also contained a clause prohibiting renewal of the lease if the tenant were late in payment of rent three times in the prior term.  The tenant sent a notice of renewal, but had been in default more than three times in the term.  The building subseqently sold and the tenant sued for violation of its option to purchase.  The trial court granted summary disposition to the new owner and the tenant appealed.

The Michigan Court of Appeals affirmed.  The tenant’s notice of renewal for a new term was ineffective because the tenant had not fulfilled a condition precedent to renewal of the lease.  Because the lease was not renewed, the tenant became a month-to-month tenant and the option to purchase expired.  The landlord’s acceptance of late rent was not considered a waiver of the condition precedent that the tenant not be late in rent.

© Steve Sowell 2022