On September 8, 2026, Justice Patel of the New York County Commercial Division issued a decision in ET JV Holdings, LLC v. TBH-ASL BSA Member LLC, 2026 NY Slip Op. 51558(U), holding that an option cannot be exercised before the beginning of the option period, explaining:
Notwithstanding that the December 2 Notice was premature, the Elie Parties argue that the early notice to exercise the option should nevertheless be deemed as effective. The Elie Parties argue that (1) there is no New York authority holding that an early notice—with no other deficiencies—is defective; (2) Bluestar had actual notice and suffered no prejudice from the premature notice received approximately four weeks early; and (3) equity should prevail and allow the purchase. The crux of the Elie Parties’ arguments is that an early notice is fundamentally different from a late notice. However, accepting such a principle—however logical it may be—contradicts binding New York precedent as to the strict construction of option contracts and the parties’ clear intention that the Buy Back Option is available during a defined period and “not before [7] years, and not after [7] years.” The drafting history of Section 10.1 absolutely supports that the parties negotiated with precision about when the Buy Back Period would commence. Accordingly, the Court is constrained to determine that the December 2 Notice is defective. An option contract is an agreement to hold an offer open; it confers upon the optionee, for consideration paid, the right to purchase at a later date. The most striking feature of the contractual arrangement known as an option is that while the optionor cannot act in derogation of the terms of the option agreement, the optionee is not bound until the option is actually exercised. Thus, until the optionee gives notice of his intent to exercise the option, the optionee is free to accept or reject the terms of the option. Under New York law, strict adherence to the terms of an option is required, and a notice exercising an option is ineffective if it is not given within the time specified. The Court will address each of the Elie Parties’ arguments in turn.
First, while there is no legal authority addressing whether an early notice in the context of option contracts, absent other defects, should be deemed as valid, there is likewise no legal authority that this Court can invoke to reach a determination that strict construction does not apply to premature notices. The absence of controlling authority does not grant this Court license to create new law and/or ignore the strict construction principle applied to option contracts, including that the notice must be provided in the specified time period.
Second, the Elie Parties apply a notice and prejudice standard in favor of finding that the early notice here should be deemed as effective. The Elie Parties argue that Bluestar was on actual notice that Elie sought to exercise the Buy Back Option under Section 10.1 as of December 2, 2024. There was no prejudice to Bluestar as a result of the early notice because it only pursued a sale of the Company to TPG upon learning of Elie’s intent to exercise the option—there was no sale process in play prior to December 2, 2024.
However, the Elie Parties rely upon substantial-compliance cases about the manner of delivering notice (e.g., mail versus facsimile, wrong address, oral instead of written), not about satisfying a precise temporal boundary—negotiated by the parties—that defines when the option right is available.
Finally, the Elie Parties argue that the equitable doctrine of J.N.A. Realty Corp. should extend beyond the landlord-tenant context because, inter alia, Elie would suffer a grave forfeiture if his buyback were not permitted. In J.N.A. Realty, a commercial tenant, through its own negligence, failed to give its landlord written notice of its intent to renew the lease within the six-month window that the lease required. The tenant had substantially invested in improving the premises, and thus losing the lease meant forfeiting the investment along with the business location. The landlord sought to enforce the lease strictly and recover possession, but the Court of Appeals held that equity may relieve a tenant from such a forfeiture where (1) the failure resulted from negligence, inadvertence, or honest mistake, (2) the tenant would otherwise suffer a forfeiture, and (3) the landlord would not be prejudiced by the delay. Subsequently, the Court of Appeals has indicated that J.N.A. Realty is a narrow equitable doctrine and its holding is restricted to tenants who make considerable investment in improvements to the premises in anticipation of the lease renewal or would lose a considerable amount of customer good will should the lease not be renewed. The Elie Parties cite no precedent to extend the equitable doctrine articulated in J.N.A. Realty Corp., which involved tangible improvements to real property and loss of a physical location, to an options contract involving membership interests.
(Internal quotations and citations omitted).
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