A recent lower court case out of Manhattan, New York raises two very interesting legal issues for both landlords and tenants:
- Is an email adequate notice if the lease requires “written” notice?
- Is the tenant entitled to rent abatement if the landlord fails to provide power to the premises?
I’ll address the first issue in this article and follow up on the second issue in a future piece.
We’ve all heard about the wind and rain damage caused by Hurricane Sandy in New York last year. I lived through a number of hurricanes in New York, but the vision of that ocean water flowing into subways and shops in lower Manhattan was a real shocker, unlike anything I ever saw. Even though many businesses weren’t flooded or directly damaged by the hurricane, many south of 23rd Street were without power for quite some time.
Just Salad, a restaurant located on Maiden Lane (that’s around Wall Street for you non-New Yorkers) apparently lost power with the rest of lower Manhattan and consequently didn’t pay two months’ rent following the hurricane.
The landlord brought suit to collect withheld rents and argued that the tenant was required to provide notice of the incident to the landlord. The tenant argued that notice was given because there was evidence of emails regarding the incident being sent and received by the landlord and tenant.
This got me thinking
Without going into detail on the facts of this case, which I do not immediately have available, I “ruminated” (to borrow a term from Ira Meislik) on the language that I see in most leases where the parties are required to give “written” notice.
In 2000, President Clinton signed into law the Electronic Signatures in Global and National Commerce Act (“ESIGN”). Among other things, ESIGN created certain minimum standards for all states allowing digital signatures to be used in lieu of ink, or as I refer to them “wet” signatures. ESIGN attempts to bring commerce into the digital age, primarily by changing the definition of the term “writing.” For us lawyers, ESIGN changed the definition of a “writing” in the Statute of Frauds. Now, I’m not going to go all “legal” on you, but I’ll explain a little of the law before I proceeding. Trust me, you need this.
This will only hurt a little
The Statute of Frauds is an evidentiary rule that we lawyers argue a lot about when we’re in court. In essence, The Statute of Frauds describes when a contract must or must not be in writing to be enforceable. For you commercial real estate people, the Statute of Frauds states that a contract for a term longer than 1 year must be in writing. It also provides that a contract for the purchase of sale of real property must be in writing. It says a number of other things, but we need not discuss those for the purpose of this article.
ESIGN affects how we think of a writing. It clarifies that a digital communication expressing a person’s intent to do or perform an act is all that is necessary to be considered a writing and binding on a party. Therefore, if the tenant receives an email from the landlord stating “your rent is forgiven for the next two months,” then the tenant isn’t obligated to pay rent for the next two months (unless the lease states that a writing does not include digital communications).
And now, my point
If either party does not want emails or other digital communications to satisfy written notice requirements in the lease or the requirement that any modifications to the lease must be in writing—they better say so in the lease. Otherwise, emails may affirmatively and effectively modify the terms of the lease and satisfy notice requirements.
So what language should be included in the lease that effectively excludes emails as a method of modifying the lease terms or satisfying notice requirements? The parties should clearly state that digital communications and documents, including, but not limited to, emails and PDF documents, are not to be considered a writing that can modify or satisfy any of the obligations of the parties to the lease. In addition, as to written notice requirements, the parties can require the delivery of notices by U.S. Postal Service, Return Receipt Requested, or overnight carriers such as Federal Express or UPS. By requiring a method of delivery that necessarily excludes email, you have effectively eliminated email as a viable method of notice or modification.
There are a number of other issues or concerns that I have not yet addressed, which I’ll write about in later articles.
Finally, I would like to recognize that this article was inspired by Rayna Katz’s May 14th article on GlobeSt.com, which you can read read here.