Legal Updates

A lessor is not required to send a reminder to a lessee regarding the deadline for exercising the option

March 5, 2023

A lessee forgot to exercise its option on time and refused to vacate the leased property, only because it did not receive a reminder from the lessor regarding the deadline in which the option can be exercised.

The Court accepted the eviction claim and held that a lessor is not required to remind the lessee to exercise the option on time. The duty to act in good faith obliges the parties to the agreement to behave towards each other honestly, fairly and according to what is customary acceptable between fair parties to a contract. One who is entitled to an option in the contract must follow the contractual requirements for its exercise accurately and with precision. Here, the agreement stated that the lessee has an option to rent the property for an additional period, but subject to notification given to the lessor 90 days prior the end of the lease. The option gave the lessee a preferential right, since it has the choice whether to extend the contract or terminate it. Therefore, the lessee, and not the lessor, has an increased duty to act in good faith. The lessor did not fail the lessee and did not mislead it as to the deadline by which the lessee had to deliver its notice. It is not acceptable to oblige lessors to send reminders to lessees regarding the deadline for exercising the option, or to waive the stipulated deadline in the contract. Therefore, the lessee must vacate the property.