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Law and Real Estate

April 28, 1985|DOUGLAS RING and BUSTER SUSSMAN | Ring is a partner in the law firm of MacDonald, Halsted & Laybourne; Sussman is a free lance writer

When is an option not an option?

When the terms are too vague for the court to enforce.

Take the tragic tale of Etco Corporation vs. Hauer. The two entered into a lease with a five-year option to renew at the original terms--except for the rent.

When the original term of the lease expired, the tenant notified the landlord that he wanted to renew the lease for the additional five-year period. The lease said that the rent for the extended period would be determined by mutual agreement.

You guessed it.

They could not agree.

The landlord wanted $2,500 to $3,000 a month. The tenant was willing to pay only $1,100 per month.

The judge ruled that the parties had created their own problem by not establishing a standard by which rent could be determined. The renewal option couldn't be enforced by the courts.

How could they have avoided their problem? They could have written the lease option to say:

--That rent would be determined by fair market value; or

--That rent would be determined by some arbitration procedure; or

--That rent would be determined by any measurable standard.

The moral of this story is that the court is not going to do for you what you should have done for yourself. Contracts that are vague will not be made clear--or enforced by a judge or jury.

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