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Smart Realty, Inc. v. 986 River Road, Inc.

A-1325-09T1 (N.J. Super. App. Div. 2010) (Unpublished)

LEASES; NOTICES — If a landlord sells a property and the new landlord fails to advise the tenant of replacement addresses for the purpose of sending notices, the old tenant does not necessarily have to send notices to the former landlord even though those are the addresses within the Lease; it is sufficient if the new landlord receives actual notice even if not sent strictly in accordance with the provisions of the lease.

In 1995, a tenant leased office space. Between then and 2003, there were a number of agreements regarding the lease and a number of those “included provisions for how notices were to be given and [about] options for renewal.” Once the property was sold to a new landlord in 2003, no new or amended lease agreements were executed and the new landlord never provided its tenant “with instructions regarding the exercise of the renewal option or how notice was to be given to the [new] landlord.” In fact, the new landlord never notified the tenant “of its status as the new landlord and just sent invoices for rent.” A name and address was shown at the top left of each invoice and the invoice instructed the tenant to use that name as the payee on its rent checks. The return envelope for these invoices was on the stationary of a company related to the new landlord and that name and address, in fact, was the one shown on the invoice instead of the actual name of the new landlord. It turned out that this name was that of a company related to the new landlord.

The tenant set out to exercise its renewal option. It sent a letter to the attorney for its original landlord explaining that it was providing notice to him because the attorney for the new landlord had never responded to prior correspondence. The notice letter, in effect, advised the recipient that the tenant was exercising the renewal option “as identified in the Compromise and Settlement Agreement and the Lease dated August 1, 19[9]8.” This letter was delivered to the former law office of the original landlord’s attorney. Because that attorney had changed firms, he did not receive the letter. Copies were also sent to the address that the new landlord had used on its rent invoices and to the tenant’s own attorney. The tenant called the principal at the company whose name was on the rent invoice to confirm that the letter had been received and was told that the letter had been received. Despite the tenant’s contention, that individual testified, at trial, “that he did not receive the letter sent to [the company whose name was on the new rent invoices].” He admitted, however, “that he received and cashed a check for that month’s rent payment that was sent in the same envelope.” For this and other reasons, the lower court “explicitly” found the landlord’s testimony to be untruthful. The landlord also “initially denied have the conversation,” but telephone records reflected a call between the tenant’s office and the landlord’s office on the very day that the tenant claimed the “confirmation” telephone call had taken place.

Even though the landlord realized that the lower court believed that it had received actual notice of the tenant’s renewal, the landlord argued that a “valid exercise of the renewal option required ‘strict compliance’ with ‘an appropriate’ written notice delivered and directed to the then landlord ... and to its attorney ..., all as set forth in the lease related and settlement documents.” For sure, each of the lease related documents executed before the property was sold required that written notice be given by “personal delivery in writing or by mail, registered or certified, prepaid with R.R.R” to the specific address of the original landlord. The Court, however, read all of these provisions to “only require delivery to [the old landlord’s] address and [the old landlord’s] attorney’ so long as [the old landlord was] the owner.’” The Court did not believe that the lease documents dictated “where notice should be directed” if the property was sold and took note that the new landlord “never took any action to instruct [its tenant] to whom and where notice should be given after it became the owner.”

This set of correspondence with the owner was not, in fact, the first such correspondence. Three years earlier, the tenant wrote to the address on the rent invoices regarding the lease at the property. At trial, the principal of the company whose name was on the rent invoices and also of the actual landlord, never advised the tenant that the company whose name was on the rent invoices “was not, in fact, the landlord.” The original landlord was located at the same address and the same individual “was the exclusive owner of both [the landlord and the company whose name was on the rent invoices]. ” They used the same fax and phone number. The same individual opened and responded to mail of both companies.

The lower court rejected the landlord’s argument that the tenant “could not effect a valid exercise or renewal option through [merely] ‘substantial compliance’ with the notice requirements,’” and ordered that the renewal be honored. The landlord appealed, but unsuccessfully. The Appellate Division reviewed the record and the arguments below and was satisfied that the lower court had reached the proper decision. The Court was satisfied with the lower court’s credibility determinations and agreed that because the new landlord “received actual notice” of the tenant’s exercise of the renewal option, the renewal was effective notwithstanding that technical compliance with the lease documents would have required a specific kind of notice being sent to a former landlord and the former landlord’s attorney.

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