Like any contract, leases must meet certain requirements to be legally valid. One of these requirements was addressed in a recent decision of the New York Supreme Court Appellate Division, First Department. The case involved a lease amendment that was signed by the tenant but the tenant never received a copy of the fully executed agreement. The landlord subsequently sued to enforce the amendment. The issue was whether the lease had been legally delivered to the tenant allowing the lease to be enforced.
In Walber 82 St Assoc., LP v. Fisher, the plaintiff leased a store to the tenant corporation in 2004. The defendant Fisher was principal in the corporation but not a guarantor of the original lease. The term of the original lease was extended in 2012 and in August 2018, the plaintiff provided Fisher with a second amendment which named Fisher, and not the original corporation, as tenant. In 2022, the plaintiff sued Fisher for back rent and use and occupancy for the period after the lease had been terminated by it as well as its attorneys’ fees and costs, and moved for summary judgment. The lower court granted the plaintiff’s motion for summary judgment and awarded the plaintiff attorneys’ fees as provided in the lease. Fisher appealed the decision. The Appellate Division agreed with the defendant and reversed the judgment.
In opposition to the plaintiff’s motion for summary judgment, Fisher claimed that after the first lease amendment expired in 2016, the corporate tenant remained as a month-to-month tenant. In August 2018, Fisher alleged he signed a signature page for the second amendment while he was out of the country as a favor to the property manager. He did not see the full amendment. He also claimed that although the second amendment was notarized, he never appeared before a notary in New York (as he was out of the country) and that although he requested a copy of the fully executed document, he never received it until the plaintiff had commenced the action in 2022. Fisher did not take the position that he did not owe any money, but rather that he only was responsible for paying fair market value rent for use and occupancy of the premises.
The Appellate Division admonished Fisher for his failure to read the entire second amendment before executing it because a “party is under an obligation to read a document before he or she signs it.” However, the Court nonetheless held that a tenancy could not be created without the legal delivery of the fully executed lease to the tenant. The Court found that the plaintiff did not offer sufficient proof to rebut Fisher’s showing that he never received delivery of the executed second amendment prior to the expiration of the lease term. There was no admissible proof in the record that the fully executed second amendment had been delivered to anyone and therefore, there was an issue of fact as to whether the plaintiff demonstrated an “intent to convey a leasehold interest to Fisher” and thereby enforce the lease. Further, the fact that Fisher continued to occupy and pay rent for the space after the expiration of the first amendment was just as consistent with a month-to-month tenancy as it was an extension of the term of the lease.
As a result, the case was remanded to the lower court for further proceedings in accordance with the Court’s decision. The Court also noted that since the plaintiff was not entitled to summary judgment, it was also not entitled to an award of attorneys’ fees pursuant to the lease at this time.
The lesson to be learned from this case is that in order to have a fully binding lease, the agreement must be signed by and delivered to both parties.
If you have any questions regarding your lease, whether you are a landlord or a tenant, please contact one of our attorneys.