Under certain circumstances, a tenant can miss a deadline for extending its lease and a judge will grant a special grace period. In the case of REI, Inc. v. World Wrapps Northwest, Inc, No. 66226-1-I (Dec. 19, 2011), the Washington Court of Appeals upheld the trial court’s determination that special circumstances warranted granting a grace period to World Wrapps when it failed to exercise an option to extend its lease within the period required by its lease with REI. The court granted the extended period on equitable grounds, finding that a drafting error in the lease led to some ambiguity over the relevant deadlines for World Wrapps to exercise the extension option. The court was also persuaded because World Wrapps had spent significant sums in tenant improvements, ostensibly relying on the extended lease, and because REI waited nearly two months before notifying World Wrapps that the extension deadline had passed.
The lesson here is that equity and fairness sometimes trump the strict interpretation of the terms of a lease.