Landlords and Tenants Beware: A Lease Amendment Could Threaten the Viability of the Original Lease

David Marmins and Jordyn Simon, AGG Litigation attorneys and members of the Retail industry team, authored an article titled, “Landlords and Tenants Beware: A Lease Amendment Could Threaten the Viability of the Original Lease,” published by the American Bar Association on November 13, 2023. The article discusses how lessors and lessees often cut corners and enter into a lease amendment to memorialize the “now” to avoid entering into a new lease. This is particularly true for anchor tenants in shopping mall developments that have operated for 40 or 50 years. However, this tactic can have implications for related third-party agreements.

David and Jordan explain that this issue recently came to a head in J.C. Penney Corp., Inc. v. GFM 23, LLC et al., in which the Pennsylvania State Supreme Court unanimously denied an appeal filed by J.C. Penney Corporation, Inc., thereby affirming the Superior Court of Pennsylvania’s ruling that, among other things, a lease amendment can go too far, cancel the underlying lease, and render a third-party recognition agreement obsolete.

“The holding in J.C. Penney Corp., Inc. v. GFM 23, LLC et al., is a cautionary tale not to take the easier path of amending when a new agreement is needed,” David and Jordan advise. “Parties often enter amendments as a short cut without contemplating long-term implications. Ultimately, everyone gets burned and nobody ends up with the rights and obligations they thought they had. As often is the case, slow and steady wins the race.”

To read the full article, ABA members may click here.