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We have a disagreement between a business/commercial landlord and tenant over the renewal terms of the lease agreement. It is written as:

"The term commences on the commencement date and expires one year later. The term shall automatically renew for an additional lease term of one year unless terminated by written notice of tenant".

The Landlord interprets this as a 1 year + 1 more year. The tenant interprets this as renewing multiple times, year after year, unless terminated by tenant. Landlord wants to increase rent drastically and remove the automatic renewal language from the upcoming contract. Which is the proper view in Michigan?

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    I read that as a single renewal, there should be some verbage as to what the terms are after the lease ends, like month-to-month or if the property is to be vacated. It may help to see more of that clause. – Ron Beyer Apr 30 '18 at 22:44
  • There is no additional verbage. That is the only portion regarding the term, renewal, and termination. It seems that it can be interpreted in either fashion. For it to be interpreted as multiple/continual renewals, would the term "successive" terms of 1 year be necessary? – Annie Apr 30 '18 at 22:59
  • There are multiple ways to write it, but in the leases I've been a party to it usually says something like "the lease shall continually renew in periods of one year unless terminated prior to renewal by either party in writing..." Then there are additional wording to allow the landlord the ability to adjust the rent at renewal times and giving the tenant the ability to decline to continue. – Ron Beyer Apr 30 '18 at 23:09
  • I agree. Without some verbage such as "successive" or "continually", this can be perceived as a single, one-time renewal only.... but leaves it way too open to interpretation for my liking. – Annie Apr 30 '18 at 23:36
  • @RonBeyer verbiage (note spelling) like that is perhaps common in residential leases, and provisions like that are sometimes created by legislation. Commercial leases are somewhat different as I understand it. – phoog May 1 '18 at 1:22
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The landlord's reading is more likely to be the correct one.

The term shall automatically renew for an additional lease term of one year ...

"An" refers to a singular instance and there is no suggestion elsewhere that the additional year will create another automatic renewal. In fact, interpreting it this way measn that, except at the instigation of the tenant only, the lease will never expire - this cannot be what was intended.

  • I initially agreed with the tenant because the additional term would still follow the language of the original, meaning that the automatic renewal remains during this additional and subsequent terms. I have seen specific verbage with the term "successive years". This implies that the above scenario would be my interpretation. Without the "successive" verbage I can see how this could imply just 1 single renewal as opposed to continually renewing. Uncertain though – Annie Apr 30 '18 at 23:27
  • @Annie there is an "i" in "verbiage." – phoog May 1 '18 at 1:23

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