The Massachusetts Appeals Court held that a commercial tenant could not use a lease clause letting it terminate if its business licenses were not issued, because the tenant never applied for the state licenses at all. The landlord kept its judgment for all rent due under the lease plus attorney’s fees. This is an unpublished Appeals Court decision under Rule 23.0, which courts may cite as persuasive but not as binding precedent.
What happened
A cannabis company leased floors in a commercial building to grow and process cannabis. The lease let the tenant terminate on ninety days’ written notice if the licenses it needed were not issued, but not if the tenant intentionally failed to obtain them. The tenant never moved in, paid rent through October 2021, and in February 2022 sent a letter saying it was terminating because it had not and could not obtain the licenses. The landlord said the letter was ineffective, noting that the tenant had obtained local approvals with the landlord’s help but never applied for the state licenses. The landlord brought a summary process case. The tenant did not contest possession, did not answer, and called no witnesses at the damages hearing, and the judge awarded the landlord $1,005,217.96.
What the court decided
In Macgregor Mills, LLC v. Waveseer of Massachusetts, LLC, No. 25-P-1001 (Mass. App. Ct. August 7, 2026) (Rule 23.0 decision), the court affirmed the judgment.
A one sided exit clause is read strictly. Interpreting a lease is a question of law. Lexington Ins. Co. v. All Regions Chem. Labs, Inc., 419 Mass. 712, 713 (1995). A termination right that exists only for one party’s benefit is strictly construed, and that party must follow its conditions exactly. Loitherstein v. International Business Machs. Corp., 11 Mass. App. Ct. 91, 94 (1980). A party who stumbles in using such an option generally cannot get equitable relief. Id. at 96.
The tenant had the burden. A tenant relying on a condition to end its lease obligations must prove the condition was met. Patriot Power, LLC v. New Rounder, LLC, 91 Mass. App. Ct. 175, 180 (2017). Here that meant showing the licenses did not issue through no cause of its own. The tenant offered only its letter.
Every word of the clause counts. The tenant argued that any failure to get licenses, for any reason, let it walk away. The court rejected that reading because it would make the clause’s second sentence, about intentional failure, meaningless. A lease should be read so no phrase is rendered meaningless. Lexington Ins. Co., 419 Mass. at 713. Making no effort to apply was an intentional failure to obtain the licenses. The court added that a tenant need not necessarily file a hopeless application, but there must be some explanation of why applying would have been futile.
No evidence, no defense. The tenant later argued the building’s electrical system was inadequate, so an application would have failed. But the record held no evidence at all about the electrical system. The tenant had not raised it in its termination letter, filed no pleadings, and offered no witnesses or exhibits. The judge still considered the claim and found the failure to apply was intentional. New regulatory arguments the tenant raised for the first time on appeal were waived.
What this means for you
If you run a business and your lease lets you leave when a permit or license falls through, read that clause closely before you rely on it. Courts read a one sided exit clause strictly. If the clause says you cannot use it when you caused the failure, you will likely need proof that you actually tried, or a documented reason why trying was pointless.
This case is also a warning about showing up. The tenant claimed a real problem with the building. The court noted that if the tenant had offered evidence, it might have raised a compelling defense. But the tenant filed no answer, called no witnesses, and offered no documents. Without evidence, a possible defense is worth nothing, and the result here was a judgment of over one million dollars.
What to do now
- Read your lease’s termination, contingency and permitted use clauses, including any exceptions.
- Apply for required licenses and permits promptly, and keep copies of every filing and response.
- If a building problem blocks your business, document it with expert reports and written notice to the landlord.
- State every reason for termination in your termination letter.
- If your landlord sues, answer on time and bring your evidence and witnesses to every hearing.
If this is your situation, call Doubleday Law at (617) 575-2006 or tell us what happened. These cases move on short deadlines.
Prior results do not guarantee a similar outcome.
