For example, a start-up can rent office space for three years. An extension option would allow the company to renew or extend the lease to remain in the office space beyond the three-year lease period. This can be beneficial for the company if it is doing well on the site, as it allows the company to stay for an additional period of time. Without an extension option, the company could be pushed into bankruptcy and instead another policy that could have offered more money could be withdrawn. The original lease included an option to purchase with fixed prices for each of the 5 years of the lease. The lease was renewed with an annual rental amount reserved each year, but the amount of the purchase was not mentioned. Now we have had an offer to purchase from someone else at a higher price than stated in the original lease. The tenant now wants to buy the building 3 years after the expiry of the original lease only because we had another offer to sell at a higher price. Does anyone know if we have to sell to the tenant at the price of the 1st lease? Shy, I have the same problem, what kind of things would you look for in the agreement to stop this? 5. Limit who can exercise the option. Commercial leases should include clauses that address the ability of the parties to assign the lease. If a lease allows a tenant to assign their rights, a landlord may want to limit each extension option to the original tenant rather than their assignee. Similarly, a ”change of control” provision can protect a landlord from an end of a situation where a tenant sells the shares or membership interests to another party with whom a landlord may not want to enter into a contract.

In addition, the tenant must strictly adhere to an extension/renewal option agreement that specifies the steps to be taken and the period during which they must occur in order to properly exercise the option. If the tenant does not complete any of the steps described in the option agreement, the option will not be exercised and the lease will expire at the end of its original term. [Bekins Moving & Storage Co. v Prudential Insurance Company of America (1985) 176 CA3d 245] Question If I said yes, I am invited to take a 1-year extension, but things have changed now and I am happy to leave at the end of the current lease, can I get out of the extension? If there are no new conditions and John remains in the apartment, the lease with the renewal option will continue permanently (unless otherwise stated) until it is modified or cancelled by either party. Extension options can benefit both tenants and landlords; However, they require careful negotiations and projects to avoid unintended consequences. If you are a homeowner and would like to learn more about best practices for designing options in commercial leases and other related topics, contact Rob Hamor at 248.785.4737 or rhamor@fosterswift.com. Renewal Period Notice of Termination). If one of the parties gives such a notice period for the extension from month to month, it will be assumed that the tenant has chosen the return option at the end of this monthly renewal period. If the equipment is then not in good condition, in good condition and in good working order, if it is exempt from normal wear and tear or if it has not been maintained in accordance with section 6 of this document, the lessee must immediately reimburse the lessor for all reasonable costs incurred to restore the equipment to that condition. If, at the end of the term of the lease, the Renter has chosen the return option and a project document relating to the equipment in question is no longer in force and effective, the Renter must (i) reimburse the Lessor for the costs of restoring the Equipment as specified above within sixty (60) days of the end of the lease term at the Tenant`s Expense and (ii) remove all equipment from the relevant website, Repair of damage to the relevant location caused by such removal so that the website is restored to its original condition at the time of installation of the equipment, pack the equipment in appropriate shipping containers, ensure shipment for the fair market value of the equipment at that time and arrange for the delivery of the equipment to a location in the United States, that the owner may specify. If, at the end of the lease term, the lessee has chosen the return option and a project document is fully in effect and effective with respect to the equipment in question, the lessee must assign that project document to the lessor or owners designated by the lessors.

2. Renewals vs extensions. A lease should clearly indicate whether a tenant has the option to ”renew” or ”renew” the lease. While this may seem like an academic exercise, the difference between an extension and a renewal is significant. While an extension extends the term of the existing lease, an extension allows the parties to re-execute the lease. If the landlord has granted concessions such as free rent, an extension can revive these concessions. An extension only modifies the original lease by extending its expiry date. The amended lease is not subject to changes in the law or charges that arise during the term of the original lease.

[See Form RPI 550 – 552-4] An extension extends beyond the initial term of the lease, retaining all aspects and conditions created by the original lease. When exercising the renewal option, the initial termination date for eviction specified in the lease will be changed as provided in the terms of the option and will extend the duration of the additional period. In addition, renegotiating rental and lease terms after a lease expires can result in increased rental rates, higher maintenance fees for the common space, and other landlord fees. In addition, a landlord may impose changes of responsibilities on the tenant when negotiating a lease with the rest whose extension option expires without practice. [Bekins Moving & Storage Co., above] My lease expired in August 2015. I told my landlord that I would sign a lease if she lowered the rent, she agreed via SMS. Then, about a month later, she was in the process of selling her property (mall with a standalone restaurant that I rent) and told me that the new owner did not want to sign new leases. She never took her offer off the table. At the end of January 2016 she then told me by SMS that she would increase the rent in 3 days because she had 2 other people who were interested in the property. .