## Facts

- In 1967, Halver Moolenaar, a sheep and goat farmer, leased 150 acres on St. Croix for five years at $375 per month.
- The lease granted an option to renew for an additional five years and stated that renewal rent “shall be renegotiated.”
- Moolenaar used the land to expand his farming operation during the initial term.
- The land was later sold to entities culminating in Co-Build Companies, Inc., which took title subject to the recorded lease and had actual knowledge of the renewal clause.
- About six months before the lease term ended, Moolenaar notified Co-Build that he would exercise the renewal option.
- Co-Build demanded $17,000 per month, asserting the land’s value based on industrial potential; the property was zoned light industrial.
- The parties failed to agree on renewal rent, and Moolenaar sought declaratory relief to determine the renewal clause’s meaning and enforceability and to set rent.

## Issues

1. Whether a lease renewal option is valid and specifically enforceable when the renewal clause leaves rent to be “renegotiated” by future agreement.
2. If enforceable, what standard a court should use to set renewal rent when the parties cannot agree, including whether rent should reflect “highest and best use” or the use contemplated by the original contracting parties.
3. Whether extrinsic evidence may be considered to determine the parties’ intended use and the appropriate rental basis for the renewal term.

## Decision

- The court held the renewal option valid and specifically enforceable despite the absence of an agreed renewal rent.
- The court implied an objective term: the renewal rent must be “reasonable” or reflect “fair market” rent.
- The court admitted extrinsic evidence to determine the use the parties contemplated when they agreed to the renewal clause.
- The court rejected using speculative industrial value as the rental baseline and instead treated the fair market rent as tied to the contemplated agricultural use.
- The court set the rent for the renewal term at a reasonable agricultural rate (reported as approximately $400 per month).

## Legal Principles

- A renewal clause requiring rent to be set by later “renegotiation” is not necessarily void for indefiniteness; a court may supply a reasonable or fair-market-rent term to make the option enforceable.
- When a court supplies “fair market” rent for an indefinite renewal clause, it may determine fair market rent with reference to the parties’ contemplated use, rather than automatically applying “highest and best use.”
- Extrinsic evidence may be used to explain the renewal clause’s implied term and to determine whether the parties intended the rent to be measured as though the premises were subject to use-related limitations.
- A successor landlord who takes with notice of a recorded lease is bound by the tenant’s renewal rights under that lease.
- Lease ambiguities affecting renewal rights may be construed against the landlord to avoid forfeiture of a bargained-for renewal option where the tenant has relied on it.

## Conclusion

The court enforced the tenant’s renewal option by implying a reasonable-rent term, considered evidence of the parties’ intended agricultural use, and set renewal rent accordingly, rejecting the successor landlord’s attempt to impose a dramatically higher rent based on industrial potential.


Moolenaar v. Co-Build Cos., 354 F. Supp. 980 (D.V.I. 1973)