Auto-Renewed Office Lease Turns Out To Be Unenforceable Under North Dakota Law

A dispute arose last year between a commercial landlord in North Dakota and one of its office tenants when the landlord automatically renewed the tenant's office lease.

The tenant's position was that it gave the landlord prior notice of termination, and that said notice precluded renewal. The landlord's position, on the other hand, was that the tenant did not have the right to terminate and that, for this reason, the tenant's prior notice of termination did not preclude automatic renewal of the lease.

Now, as with many disputes between landlords and tenants, the reason that that the tenant wanted to terminate in the first place had nothing to do with the renewal. Rather, the tenant's motivation to terminate had to do with the landlord's various, prior failures to perform as agreed, etc. Nonetheless the issue of the renewal was an important part of the dispute, because it represented such a large line-item of dollar value. So, it was worthwhile for the tenant to allocate some time to determine the enforceability of the renewal.

Are automatic renewal clauses enforceable?