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West Haverstraw Improvement Corporation v. Refcon, Inc.

A-2560-05T5 (N.J. Super. App. Div. 2007) (Unpublished)

LEASES; NOTICES; MAILBOX RULE —The mailbox rule, which deems delivery of a notice complete upon placement of the notice in the mailbox, applies to lease renewal notices where the parties had communicated by mail on previous occasions, especially when one of the parties is rarely present in its physical office.

A commercial landlord and tenant entered into a three-year lease agreement. It permitted the tenant to terminate the lease one year early, on November 30, provided the tenant gave the landlord written notice of termination by September 10. The tenant mailed a letter of termination on September 10. This letter, however, was not postmarked until September 11 and was not received by the landlord until September 22. Further, the letter notified the landlord the tenant planned to end its lease on December 30, one month after the agreed-upon date for early termination. The landlord claimed the notice was invalid according to the terms of the lease and brought an action to recover the accrued rent and additional rent for the remainder of the lease term. In a bench trial, the lower court found that the tenant had substantially complied with the early termination provision of its lease. It also found the landlord had not suffered any prejudice by a delay in receipt of the notice and had failed to mitigate its damages by taking sufficient steps to relet the space.

The landlord appealed, but the Appellate Division rejected the landlord’s argument that the notice was invalid because it did not comply with the lease agreement. The Court invoked the “mailbox rule,” by which delivery is deemed complete upon the placement of a notice in the mailbox. As such, the tenant effectuated delivery on September 10, in compliance with the lease’s terms. The Court disagreed with the landlord’s contention that the mailbox rule only applies in cases in which parties located at a distance from one another undertake a contractual agreement, and found the rule to be applicable among parties closely located who had communicated by mail on previous occasions because one of the parties, the landlord in this instance, was rarely present in its physical office.

Further, the Court agreed with the lower court’s finding that notice was valid even though the tenant elected to terminate the lease one month later than the date stipulated in the lease agreement. It reasoned the landlord had not been prejudiced by the tenant’s early termination and in fact had received the benefit of an additional month’s rent. The Court found no need to discuss whether the landlord had taken sufficient steps to mitigate its damages because the lease had been properly terminated in accordance with its terms.

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