CRE 101 - Submitted Lease Renewal to Tenant - Landlord Signed Off - Tenant Made Revisions - Never Fully Executed - 7Months Into Lease Tenant Gives 30D Notice and will leave due to business changes. Does the prior lease hold up and automatically go to a month to month?
As the title states. We LL submitted the lease renewal to the tenant in April with 2y term, with LL signature. Tenant had made their revisions to the proposed lease, but they never signed it. Revisions were made to small details, and nothing to do with the rate or term, or the original lease. Tenant has been paying the new proposed rate for 6 months, yet they never signed the document. 

So right now, the proposed lease has LL signature, with Tenant revisions, and Tenant paying the new rate for 6 months without submitting their signature. 

They called today to us know that they will be submitting their 30d notice to leave their lease since it inadvertently went to a month to month b/c they didnt sign.

Issue: The original lease doesn't have verbiage that changes the original Term to a month to month, it does have language upholding the original terms and conditions. Is the Tenant wrong in assuming that the original Lease goes to a mtm?
[{"id": "iqec8tn", "text": "Get an Attorney. Anytime I have a contract dispute on this level, a strongly worded letter from an Attorney resolves it 7/10 times. \n\nThat said, here is my best guess: assuming the lease rate increased from the old lease to the new proposed lease and the tenant is paying the new proposed rate for 6 months, I feel as if that provides de-facto acceptance of the lease terms under the new lease and that a judge would probably agree. If they had continued to pay the old rate based on the presumed assumption that they were continuing a month to month arrangement, that would have implied a rejection of the terms of the new lease. \n\nI am not an attorney, just some dude on the internet, so take that for what it\u2019s worth.", "replies": [{"id": "iqehtzk", "text": "I agree with that stance - we made some tenant requested improvements such as moving a wall, and updating lighting fixtures, and resolving hvac issues. I just spoke to a broker, she states that there was no contract. He could've paid a million or 1, and the previous lease wouldve prevailed which defaults to a month to month if the original lease isn't renewed.", "replies": [{"id": "iqem6pp", "text": "It depends on the terms of your executed lease. Without knowing how your m2m clause reads it\u2019s difficult to say if they are in breach. \n\nThe real question is, How fast can you re-lease it?  Make an offer in lieu of a lawsuit that they will pay until a new tenant is placed, not to exceed x months.  Don\u2019t return deposit (based on what your lease allows). Bill them for vacant months while re-leasing it. Send them the bill each month as usual.", "replies": [{"id": "iqfkbyb", "text": "The original lease Term section - \n\n&amp;#x200B;\n\n1. The Term of this Lease shall continue, unless sooner terminated as  provided hereinafter. It the Term is month-to-month, either party may terminate with a thirty (30) day written notice. Landlord may increase monthly Rent for any month-to-month lease with a thirty (30) day written notice to Tenant.", "replies": [{"id": "iqflzl7", "text": "Yep.  Looks like you gave written notice of increase in rent.  They didn't sign the renewal so that contract isn't enforceable.  Though, the money you spent on TI thinking they were going to stay may be recoverable, it might not be worth the cost to fight it.  \n\nTry to strike a deal.", "replies": [], "depth": 5}, {"id": "iqfmekp", "text": "The thought process behind this is that, it auto renews with the original Term which is 12 months. What verbiage in the original Lease says that once it expires it goes to a month to month? I dont see it. \n\nThe sentence below states that the Term of this lease shall continue. So the basic definition of Term, as it relates to the original lease, is defined by 12 months, should up hold.\n\nThere's no provision or verbiage in the original lease that says it defaults to m2m, after expiration or lack of executing the proposed renewal contract. Some of the tenants in the building have let their lease auto renew and are \n\nAm I right?\n\n**The Term of this Lease shall continue, unless sooner terminated as provided hereinafter.**\n\nThe section where it says the Term of this Lease shall continue, says to me that the Term of 12 months on the original shall continue, does it not? Many tenants in my building are on similar auto renewals, and in the middle of their 3rd auto renewal where the definition of Term is still being upheld as in the original lease.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "iqek1uo", "text": "I would agree with this. Another thing to consider is that if they are trying to say they were still on the old lease, and that holds up, that would also imply that they should've been paying hold-over rent for the last six months if you have that clause in your lease.", "replies": [{"id": "iqeshpq", "text": "Not sure if I follow this. \n\nOriginal lease shows $2200/month\n\nRenewed lease was marked up with revisions at $2800/month with an additional office, light fixtures, and moved a wall to create additional space.\n\nFor 6 months they were paying the NEW amount from the proposed renewal. I executed all my obligations, and they were paying, the contract was signed by me, but marked up by them with no signature from them.\n\nOld lease reads the m2m can be terminated with a 30d notice.", "replies": [{"id": "iqfaz6i", "text": "To provide an accurate analysis, I would need to see both leases and have a crystal clear picture of what happened.\n\nThis is now thoroughly in the realm of contract law and commercial lease related case law. Your client\u2019s attorney should also do a brief search for precedent within your state and thats the starting point for your argument with the tenant.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "iqefvj5", "text": "If they're paying the new rate doesn't that technically mean they agreed to your final terms? I know life happens but with 6 months you definitely should have gotten that signature. As the other comment said might be worth a call to an attorney and figure out what everyone's legal standing is. Either they are right and can leave, or they've indirectly agreed to your final offer by paying the new rate and will have to go through whatever process you have in place for breaking/sub-leasing.", "replies": [], "depth": 1}, {"id": "iqeheri", "text": "Call Lawyer.", "replies": [], "depth": 1}, {"id": "iqej4dc", "text": "Call a lawyer, but interested to know what \u201cbusiness changes\u201d entails. If they\u2019re going out of business/bankrupt then an attorney could prove your point but you might not collect anything in the end. If that\u2019s the case, have a number and list in mind for termination penalty and conditions, agreeing with above poster, a strongly worded letter from an attorney and then followed by a friendly worded compromise of termination with penalty might get you a better and more convenient outcome. Best of luck!", "replies": [{"id": "iqekisj", "text": "business changes mean that they want to be working from home vs in the office. A few of their new hires don't have the desire to go into the office on a daily basis.", "replies": [{"id": "iqf1gkz", "text": "Lol in that case enforce the renewal if you can and tell them to sublease, not your problem that their office policy changed \ud83d\ude02", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "iqejp6h", "text": "Definitely talk to a lawyer, but in the future as a landlord you should never sign the documents with tenants first. Alway have them sign first.", "replies": [{"id": "iqejwsn", "text": "Agreed, this was a big mistake on my part as I let lack of time and other obligations get in the way. Definitely a hard hit, but already on the phone with brokers trying to get a plan in place to release it.", "replies": [], "depth": 2}], "depth": 1}, {"id": "iqet3gy", "text": "What state are you in? I\u2019m not one for online advice but probably no new lease. \n\nIf LL didn\u2019t spend a ton on TI in reliance. Not a lot of equitable claims to win. Certainly no contractual claim.", "replies": [{"id": "iqet97l", "text": "Texas", "replies": [{"id": "iqetc7a", "text": "I\u2019m in Dallas if you want a chat", "replies": [{"id": "iqetgjo", "text": "Dm sent - Houston here.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "iqfmf3q", "text": "Almost certainly you now have a month to month lease at the higher rate.  Let them go. Move on. Get a new tenant.", "replies": [{"id": "iqfni14", "text": "Well lets look at this closer. \n\nWe have an attorney with a Term of 36 months. He hasnt renewed on paper since 2014. We spoke to him about his Term upon acquisition, and he stated that it is under an auto renewal and it isnt due to renew until 2023.\n\nHis monthly rent has stayed the same during these years.", "replies": [{"id": "iqfu6jd", "text": "I presumed from your post that the lease went to a month to month term after expiration. Is there a provision that says this? Generally, a lease will set forth new terms upon expiration. Most often month to month or the original term.\n\nIn the case of your lawyer tenant, he may have a lease that says it renews for original term upon expiration. In which it's expired twice, the second time being in 2020, with a 2023 expiration.", "replies": [{"id": "iqfxepp", "text": "Neither one of the leases has a provision or clause that reverts the Term to a mtm upon expiration. \n\nThere is no special language that explicitly states which Term supersedes upon expiration of the lease. My understanding is that the original Term prevails once the Lease expires, if no renewal is executed. This is how the attorney is operating, as well as another attorney in the office.\n\nSee below - this is the only language that adds color to this picture. The Hold Over section fills in the gap.\n\n**15. Holding Over**\n\nIf Tenant fails to vacate at the end of the Term, then Tenant shall be a Tenant at will and subject to all terms and conditions of the Lease, and, in addition to all other damages and remedies to which Landlord may be entitled, Tenant shall pay, in addition to the Rent, a daily Basic Rent, payable in full in advance each month, equal to the greater of (a) twice the Basic Rent payable during the last month of the Term, or (b) the prevailing rental rate in the Building for similar space.", "replies": [{"id": "iqfy7kk", "text": "This is effectively a month to month. A tenancy at will has no duration.", "replies": [{"id": "iqfygei", "text": "Or you can read it as, he chose to be a Tenant by not renegotiating and executing the lease. By default - Tenant didn't execute anything differently from the original lease terms, and no opposing argument was made to modify rates. The original Lease terms would be upheld in a court setting, and mediated.\n\nAbove it also states that the tenant is subject to all terms and conditions of the lease, which encompasses the Term/duration of the lease.", "replies": [{"id": "iqfys68", "text": "All other terms except the duration term, otherwise designating tenancy as at will would be superfluous, which is not how contracts are interpreted. Last comment. Good luck.", "replies": [{"id": "iqg0c5k", "text": "He is a Tenant at **will** and choosing to participate in this transaction by not leaving said premises. There were ample opportunities for Tenant to vacate and exercise their rights under the prior Lease, or to execute the current lease with an early termination provision.", "replies": [], "depth": 8}], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "iqfupvu", "text": "Lawyer first, but... if both parties didn't sign, there's probably no agreement. Shady, yes. Legally correct, probably not. Unless your LOI was binding???", "replies": [], "depth": 1}, {"id": "iqg87zd", "text": "Call an attorney, you might be SOL.  \n\nOn the other hand, check the original lease for holdover rent. We used to charge 150% for going MTM, maybe you can back charge 6 months if holdover and bring them back to the table.", "replies": [{"id": "iqg8iy6", "text": "Here is the Hold Over verbiage. \n\n15. Holding Over\r  \n\r  \nIf Tenant fails to vacate at the end of the Term, then Tenant shall be a Tenant at will and subject to all terms and conditions of the Lease, and, in addition to all other damages and remedies to which Landlord may be entitled, Tenant shall pay, in addition to the Rent, a daily Basic Rent, payable in full in advance each month, equal to the greater of (a) twice the Basic Rent payable during the last month of the Term, or (b) the prevailing rental rate in the Building for similar space.", "replies": [{"id": "iqga8x9", "text": "I mean, I\u2019m not a lawyer so this isn\u2019t legal advice, but you have the right to back charge the 6 months of double rent.  \nIf they get a bill for 6 months of rent and you say \u201cwe\u2019ll wipe that if you sign the lease\u201d might bring them back to the negotiating table.", "replies": [{"id": "iqgaggj", "text": "Reddit is amazing!\n\nHaving different eyes look at a lease brings out various different points of view.\n\nVery good response!!!!", "replies": [{"id": "iqgatop", "text": "Np and good luck, get a legal review just in case too always solidifies your case.   \nAt the very least since you\u2019d be charging them a year of rent maybe you get them to sign a 1 yr deal and clear the holdover rent and buy you some time to release the space.", "replies": [{"id": "iqlr96j", "text": "After disecting the original lease, and the 2nd amendment, I'm still scratching my head regarding how the lease goes to a m2m.\n\nSince the lease renewal wasn't executed, it falls back to the most current amendment, which has an expiration date of Feb 2022.\n\nAt that point, if there's a pending negotiation for a renewal, which terms and conditions do we follow in the interim?", "replies": [{"id": "iqnwhyp", "text": "Latest signed document by you and your tenant.  \n\nThey never signed an agreement for the renewal, so 2nd amendment is your go to.", "replies": [], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}]