Renewal/Extension Options

Lease extension and renewal rights are very common lease options granted to a tenant but clauses and situations vary depending on the facts and leverage of the parties. However, there are certain material points that should always form part of the clause or at least be considered carefully when drafting the clause.

At a minimum, a basic renewal/extension clause should take into account the following:

1. The Pre-Conditions:

a.  No prior default, no current default, and consider whether an outstanding notice of default pending cure is sufficient to suspend the exercise right – as I wrote about in an earlier article in The Legal Corner.

b.  Is it limited to the original named tenant or will it also apply to certain or all transferees?

c.  Does the tenant need to be in possession of and carrying on business from all of the premises?

d.  Does the exercise have to be for all the premises or can it be for less than all of the premises?

For the complete article view the document below.