Can a lease last forever?

Question

If two parties agree to a lease on real property, can the lease be binding in perpetuity if it lacks a termination date? Can the lease ever be rescinded because the lessor wishes to terminate the lease?

Answer 1

A lease agreement can terminate for many reasons. One of them is that the lease specifically states a termination date. Another is that there could be a clause allowing unilateral or bilateral termination, e.g. "the parties may mutually agree to terminate the lease", or "tenant may terminate the lease by providing 30 days notice". There can be other statutorily mandated grounds, such as the tenant being shipped out in the military, being harassed by the landlord, the premise being unsafe. If you don't pay rent, or if you run a meth factory (among other activities) the lease can be terminated.

Certain perpetual leases may be impossible in some jurisdictions, for example in Washington, a residential lease without a specific termination period is construed to be a month-to-month lease (it terminates every month, possibly subject to renewal). I don't know of a state that allows perpetual residential leases.

One might have a commercial perpetual lease, where the tenant can automatically renew the lease at the end of each period (which could be 5 years). If you don't have any stated termination period whatsoever (and the maximum duration of the lease is not statutorily stipulated), the law is "generally skeptical" about such perpetuities, see Ginsberg v. Gamson for discussion. However, "courts will enforce a lease provision that grants a tenant the right to unlimited renewals, so long as the parties' intent to create that right is explicit and clear". A contract will be construed to impose an obligation in perpetuity only when the language unequivocally compels such a construction. If the agreement fails to be crystal clear on the maximum number of renewals allowed, the court may find that, for example, only two renewals are possible (basically, looking at prior case law to see if there is some existing common law rule).