Let’s assume you are 75 per cent through your initial term of lease and the space you occupy is working well and business is good. What are some important considerations to keep in mind when approaching the lease renewal?
Although the timelines can vary, a typical lease may call for the notice of intent to renew to be given six months prior to expiration of your lease. Make sure that the exact date of that required notice is written into your calendar when you sign your lease.
I have seen many instances where Tenant has missed his option date. Once that date has been missed, there is no legal obligation for the Landlord to renew the lease.
There could be a strong adjacent Tenant who would like to absorb your space or possibly one of your competitors has approached the Landlord and is willing to pay above market rent to take over your space.
It is highly unlikely that a court would recognize a verbal request for renewal as legally binding. Make sure to get it right…put it in writing.
Reference your original lease date, address of premises and the specific option clause number as stated in the lease. State clearly that you are exercising your option to renew.
Make sure that you obtain a signature from a representative of the Landlord that it has been received. It is now up to the Landlord to come back to you with a proposal within a reasonable period of time.
Correct time to negotiate additional terms
Do not try and negotiate any other terms of the lease in that notice letter. There are many examples where a court has determined a written intent to renew as void where there were conditions or terms inserted.
If there are issues that need to be dealt with make sure you negotiate them completely prior to entering into the renewal process. If you aren’t able to come to terms on these issues you may choose to move on to a more suitable premises.
For more reading on this topic see: The Landlord-Tenant Renewal Dance and 4 Reasons You Need Representation in your Lease Renewal Negotiation.
Posted by Barry Stuart