Idaho’s Supreme Court recently issued a new opinion discussing the requirements to form a valid lease agreement. Unfortunately, the case raises as many questions as it answers.
In 616 Inc. v. Mae Properties, LLC, No. 49190 (Feb. 8, 2023), the court reminded us that four necessary terms must be agreed upon to create an enforceable lease: (1) a definite agreement as to the extent and bounds of the property leased; (2) a definite and agreed term (length of time); (3) a definite and agreed price of rental, and (4) the time and manner of payment. If any of those essential terms are left for future negotiations, no lease comes into being and the parties are left with an unenforceable “agreement to agree.” In addition, if the length of the lease term is more than one year, the lease will not be enforceable against a party unless the four essential elements are memorialized in a writing that is signed by that party. The court may, however, overlook the lack of a signed writing in cases where the contract has been partially performed if there is other sufficient evidence of agreement on all the essential terms.
In 616 Inc., the court held that the agreement under review was insufficient to create a lease because it lacked essential terms (1) and (4). In doing so, the court elaborated on what is required with respect to the extent and bounds of the property leased (i.e., the description of the leased premises) and the time and manner of payment.