The Leasing Hotline

The trial court rendered a judgment of eviction against the tenant, holding that no valid lease existed because the landlord never executed the lease. The tenant appealed, and the appellate court reversed. It held that based upon the conduct of the parties, the intent of the parties that they enter into a long-term lease was apparent. It considered the tenant's repeated requests for a new lease after the original lease expired and the fact that the landlord prepared a new lease for the tenant to sign. It concluded that any need for both parties to have executed the lease was excused by the parties' subsequent actions.

INTENT OF PARTIES

A court may find a valid lease exists where a prior lease terminates, and one party executes a new lease under which the parties continue to operate; it may be inferred by the actions of the parties that each was operating as though a valid lease existed. Enterprise Property Grocery, Inc. v. Selma, Inc., No. 38,747-CA, Court of Appeal of Louisiana, Second Circuit, Sept. 22, 2004.

The parties entered into a lease for commercial property on Feb. 28, 1997, for a term of 5 years. The lease provided that the tenant would pay $1400 per month for rent, and the tenant would have the option to renew the lease for an additional term of 5 years upon written notice. The lease expired without any renewal, and the tenant continued to make rent payments to the landlord. Several months later, the tenant discovered the expiration and contacted the landlord to request a new lease. The landlord did not respond and 3 months later, the tenant again requested a new lease. The landlord prepared a new lease proposing a monthly rent of $2000 and a term of 5 years without an option to renew. The tenant objected to the proposed lease because of the increased rent and the lack of a renewal option. A month later, the landlord delivered a letter to the tenant confirming that the tenant held a month-to-month tenancy and notifying the tenant that it intended to terminate the tenancy based upon nonpayment of rent. The following month, the tenant signed the new lease and delivered two checks to the landlord: one in the sum of $2000 for the October rent and one in the sum of $1000 “as an installment payment for the business.” The landlord admitted receipt of the checks but denied receipt of the lease executed by the tenant. The tenant paid the next month's rent and was thereafter killed in an automobile accident. The rent was paid by other principals of the tenant's business, and the landlord continued to accept payments for more than 6 months. Then the landlord delivered a written demand to the tenant to vacate the premises. The tenant responded that it was occupying the premises under a valid lease. The landlord then sent the tenant a notice to vacate the premises. When the tenant failed to vacate, the landlord commenced an action to evict the tenant.

The trial court rendered a judgment of eviction against the tenant, holding that no valid lease existed because the landlord never executed the lease. The tenant appealed, and the appellate court reversed. It held that based upon the conduct of the parties, the intent of the parties that they enter into a long-term lease was apparent. It considered the tenant's repeated requests for a new lease after the original lease expired and the fact that the landlord prepared a new lease for the tenant to sign. It concluded that any need for both parties to have executed the lease was excused by the parties' subsequent actions.