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Case Notes

By ssalkin
September 01, 2019

Despite State Law, Merger Extinguishes Renewal Rights of Successor in Interest

The Court of Appeals of Tennessee, at Nashville, has determined that, despite the general rule that a successor tenant fully takes on the rights and responsibilities of the previous tenant, a successor tenant does not have the right to exercise an option to extend its lease if the lease between the landlord and the original tenant specifically reserved that right for the signing tenant only. Simmons Bank v. Vastland Dev. P'ship, 2019 Tenn. App. LEXIS 321 (6/27/2019).

In 2003, First State Bank (original tenant) entered into a lease with Vastland Development Partnership (Vastland or landlord) for a portion of Vastland's building in Nashville. The lease specifically defined "Tenant" as "First State Bank." An addendum to the lease granted First State Bank a renewal option under the following conditions:

Provided that as of the time of the giving of the First Extension Notice and the Commencement Date of the First Extension Term, (x) Tenant is the Tenant originally named herein, (y) Tenant actually occupies all of the Premises initially demised under this Lease and any space added to the Premises, and (z) no Event of Default exists or would exist but for the passage of time or the giving of notice, or both; then Tenant shall have the right to extend the Lease Term for an additional term of five (5) years (such additional term is hereinafter called the "First Extension Term") …. Adhering to same above, the Tenant shall have the right to extend the Lease term for an additional term of two (2) five (5) year options, hereinafter called the "Second Extension Term" and the "Third Extension Term." (Emphasis added).

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