Commercial Division Blog
Lease Amendment Invalid Because Landlord's President Lacked Authority to Amend Lease
On December 12, 2013, the First Department issued a decision in Site Five Hous. Dev. Fund Corp. v. Bullock, 2013 NY Slip Op. 08344, affirming a decision holding that a corporate landlord's president lacked the authority to modify a lease, rendering the modification upon which the commercial tenant relied invalid.
In Five Site, the First Department explained that "a December 2001 amendment to a store lease" was "null and void, and awarded plaintiff possession of premises" because:
[Defendant] failed to prove that . . . plaintiff's president . . . had authority as plaintiff's agent to enter into the December 2001 amendment. It is undisputed that [plaintiff's president] did not have express actual authority to enter into the amendment. Nor did he have implied actual authority, since there is no credible evidence in the record that plaintiff performed verbal or other acts that gave Bullock the reasonable impression that he had authority to enter into the amendment.
[Defendant] relies on Riverside Research Inst. v KMGA, Inc. . . . for the proposition that an agency may be implied from the parties' words and conduct as construed in light of the surrounding circumstances. However, he fails to identify any words, conduct or circumstances from which an agency could be implied here. . . .
As for apparent authority, there is no credible evidence that plaintiff said anything to [defendant] or did anything that would cause [defendant] to believe that [plaintiff's president] had authority to enter into the amendment.
(Internal quotations and citations omitted).
Five Site shows the importance of being sure that the person making an agreement on behalf of another has the authority to do so. It turns out that even a corporate landlord's president might not have authority to enter into an agreement on behalf of the landlord.