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“Rent Paid In Advance” Lease Enforced/Insufficient Proof of Oral Modification

In a full-fledged opinion by Judge Read, the Court of Appeals determined the Appellate Division correctly held the tenant was obligated to pay an annual rent in advance and the proof was insufficient to demonstrate any contrary oral modification of the lease.  The Court explained the “rent paid in advance” concept and the criteria for oral modification in the face of a clause prohibiting it:

Under the common law, rent is consideration for the right of use and possession of the leased property that a landlord does not earn until the end of the rental period (…1 Friedman & Randolph, Friedman on Leases § 5:1.1 [5th ed 2013]).  This presumption may be altered, however, by the express terms of the parties’ lease such that rent is to be paid at the beginning of the rental period rather than the end (…1 Robert Dolan, Rasch’s Landlord and Tenant § 12:23 [4th ed 1998]; 1 Friedman & Randolph § 5:1.1). When a lease sets a due date for rent, that date is the date on which the tenant’s debt accrues (see 1 Friedman & Randolph § 5:1.1… ).  Rent paid “in advance” (i.e. at the beginning of the term) is unrecoverable if the lease is terminated before the completion of the term, unless the language of the lease directs otherwise … * * *

When the parties dispute whether an oral agreement has been formed, it is the conduct of the party advocating for the oral agreement that is “determinative,” although the conduct of both parties may be relevant … .  This is because the equity doctrine is designed to prevent a party from inducing full or partial performance from another and then claiming the sanctuary of the Statute of Frauds or section 15-301 when suit is brought … .  Eujoy Realty Corp v Van Wagner Communications LLC, 179, CtApp 11-26-13

 

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