Leases frequently include an option permitting the tenant to renew the term of the lease or to purchase the premises. This article reviews the decision of the New Jersey Supreme Court in Brunswick Hills Racquet Club v. Route 18 Shopping Center Associates, 182 N.J. 210 (2005), and subsequent cases addressing the issue of whether an option to renew or purchase in a lease should be honored despite failure to exercise the option in accordance with the precise terms of the lease. Although initially it appeared that Brunswick Hills signaled a change in the law in favor of tenants, review of subsequent decisions suggests that Brunswick Hills was decided upon its peculiar facts and that equitable relief is rare in these cases.
In Brunswick Hills, the Supreme Court reversed the Appellate Division and granted relief to the tenant despite its failure to exercise the option in strict accordance with the terms of the lease. There, the lease contained an option to purchase or convert to a 99-year lease at the end of 25 years upon timely notice of intent to exercise the option by the tenant, together with the payment of $150,000. The tenant gave timely notice, but did not make the payment, mistakenly believing it was due at closing. The landlord failed to mention the missed payment during the succeeding year and a half, or to respond to the tenant’s communications regarding the lease option until the deadline for payment had passed, at which time the landlord announced the option had lapsed.
