We Reap What We Sow – Let’s Read What We Write

We’re sure that, at one time, there were no written leases. It may have been that no one could conceive that putting the arrangement in writing would be desirable. More likely, it was that writing had not yet been invented. Jump ahead – handwritten, typed, and pre-printed leases came into being. And, then, the greatest invention of all – the word-processed form.

We imagine that when you wrote out a lease by hand, you already had negotiated the “deal” and all you were doing was to write it down. Our imagination isn’t good enough to have any sense as to how that felt, but it seems that some advantages of that process have been lost. Today, we’ll only touch on one of those – the scribe (or the one dictating the text) had to know the whole deal and then, to write it out, had to hear or read the deal in its entirety. The typed lease was probably a step away because, and we are guessing, the draftsperson might mark changes on prior, similar leases so as to reflect the new “deal.” Yet, there was no “search” or “search and replace” function – the editor-negotiator had to read the lease or, at least goodly parts of the lease.

There was a related advantage to using a printing-press “standard form” lease. Changes to such a form couldn’t be hidden. They were either interlineated on the form itself or were contained in a rider. They stood out. You could see the entirety of what was done.

Today, we all start with a form of lease. No one writes one on a tabula rasa. Frankly, Ruminations can’t find any fault with that. We could give (and have given) our thoughts as to what that starting form should say, but that’s for another 300 or more blog postings, many of which are already posted. Form leases have an advantage for their “owners.” They should know what the forms say – what is in them. Most do. Regrettably, some do not. As to those on the “other side,” seeing the form for the first time, there is also an advantage. They are forced to read the form, beginning to end. They aren’t relying on their memory as to what the form provides. They get to find out for themselves in a single sitting.

Word processors are also a powerful tool for drafting a lease. You can search for “things” in the lease, in every stage of its preparation. Importantly, there is software that will compare various versions of the document to any other version. Some are convenient to use. Some are not. In our opinion, the comparison feature in popular word processing programs ill-serve the user. Compared to third-party applications, they are burdensome and invite disuse.

Regardless of what whose brand of redlining or comparison software one uses, it matters not only that it is used and also how you use it. Based on a great deal of experience, we have a very important suggestion. Don’t just use it to compare the current lease draft to the one before it. That’s helpful to see what “further” changes had been made. It is important that, before calling a lease draft its “the final, execution” version, compare it to the original version. Look at how it differs, in its entirety, from where you started. If this isn’t your practice, you might be shocked with what you find. And, do it every, yes every, time.

We don’t know if the problem described in a May, 2018 decision from the Supreme Court of Appeals of West Virginia would still have been seen by that court had our suggestion been followed, but it’s a good possibility. [We grant that the negotiators might not have understood the implications of what was written.] Here’s the story as Ruminations would tell it. Readers can write their own stories by reading the actual opinion, available by clicking: HERE.

A lease had only 20 provisions (or, so said the court). Two of them read as follows

(1) TERM AND NOTICES

… This lease shall be considered renewed for each ensuing fiscal year during the term of the lease unless it is canceled by [tenant] 30 days before the end of the fiscal year (June 30). The signing of [the] Lease supersedes and cancels all previous agreements between the parties hereto.

and

(14) CANCELLATION OF LEASE

It is further agreed by and between the parties hereto that the [tenant] as Lessee, shall have the right to cancel this lease, without further obligation on the part of the Lessee, upon giving thirty (30) days written notice to the Lessor, such notice being given at least thirty (30) days prior to the last day of the succeeding month.

On April 30, 2014, the tenant e-mailed its landlord’s principal that it was cancelling the lease effective June 30. The lease did not provide for notices by email and the email did not go to the “landlord.” [We assume that the landlord-entity did not have its own email address.] On June 11, the landlord responded by pointing out that the notice was ineffective.

[Here’s a digression. Ruminations doesn’t understand why landlords, tenants or other parties to an agreement fail to abide by the notice provisions in their agreements. Every lease and many other agreements have such a provision. It is the norm. Go ahead and send the notice any way you want, BUT ALSO send it in exactly the way the agreement requires. Now, back to the story.]

Two days later, the tenant (presumably now having read the lease) sent a certified letter to its landlord “canceling the lease if the earlier April of 2014 e-mail did not constitute proper notice.” The certified mail notice set July 13 as the last day of the lease term. The basis for setting that date was Section 14 of the lease. That set up the law suit.

The landlord took the position that its tenant’s notice was sent “less than thirty days before the end of the 2014 fiscal year and, therefore, provision one renewed the lease agreement for another full year.” Basically, it argued that the termination provision in Section 1 of the lease was controlling.

It’s obvious to Ruminations that, at a minimum, Section 14 of the Lease was not in the starting lease form. The continuing termination right given to the tenant in Section 14 probably was added to the form. It was one-sided – the tenant had the right; its landlord did not. So, the tenant had two rights of termination. Clearly, the right to terminate provided in Section 1 was superfluous. If the tenant could terminate the lease on 30 days’ notice, at any time and without any qualifying conditions, there was no need to provide that it could “also” terminate the lease once each year.

Did the parties actually realize that the lease had both termination provisions or did they not realize that the second obviated the first? We have no way of knowing. But, we do know that, had they reviewed the cumulative changes made to the starting form, these two termination provisions would have been highlighted and that the parties would have had a better chance of realizing what they had wrought [written].

As to the result, the landlord lost. The court recited its obligation to give life to every provision of the lease and found no need to “rethink” what the parties would have done had they realized that the termination right in Section 14 obviated the one given in Section 1. Faithful readers have seen the following words, from other courts, presented in earlier blog postings. The actual words may differ, but the concepts remain the same:

[a]s with other contracts, the language of a lease agreement must be considered and construed as a whole, giving effect, if possible, to all parts of the instrument. Accordingly, specific words or clauses of an agreement are not to be treated as meaningless, or to be discarded, if any reasonable meaning can be given them consistent with the whole contract.

…

We do not find that provision one and provision fourteen directly contradict one another. Contrary to [landlord’s] claim, provision one does not indicate that it is the only method by which the lease may be cancelled. Rather, provision one provides how to adequately notify the parties of the intent to cancel the lease and how the lease may be renewed. Conversely, provision fourteen provides to respondent a clear contractual right to cancel the lease on the final day of a month after at least thirty days’ notice is provided. In order to give all provisions in the lease meaning, provision fourteen must have a purpose. Accordingly, we find that provision fourteen, which provides the option to cancel the lease upon thirty days’ notice, provides a clear method and right of termination for the lessee.

…

[T]he language of a lease agreement must be construed as a whole and give effect to all parts of the lease if possible. Provision fourteen would be rendered redundant and meaningless under this interpretation proposed by [landlord]. Therefore, we find that the clear language of provision fourteen provides its purpose without unnecessary interpretation.

… Further, [landlord] argue[s] that the circuit court should have considered the mutual intent of the parties when interpreting the lease. [Landlord] assert[s] no reasonable landlord would enter into a lease by which a tenant could demand high-dollar changes to the property and then cancel the lease in thirty days. However, this Court has previous held that “in the absence of fraud, mistake, or material misrepresentations extrinsic evidence cannot be used to alter or interpret language in a written contract which is otherwise plain and unambiguous on its face.”

Ruminations has nothing to add beyond our original and only message – let’s read what we have written before signing it.