Lease Option to Renew or Extend

As a tenant, you should know every material item in your commercial lease, including the length of the term of the lease and any options to renew or extend the lease past the initial term. If you do not have any options to renew or extend, then we suggest beginning the conversation with your landlord to extend your lease at least a year and a half prior to the expiration date. This amount of time will allow you to retain some leverage because if you wait too long, the landlord could force you to agree to new terms that are not as favorable to you. If you begin early, then you could also provide yourself with time to look for another location if negotiations do not work out in your favor.

Before you enter into a commercial lease with an option to renew or extend the lease past the initial term, you should make note of any time requirements where you have to provide notice to the landlord of your intent to renew or extend the lease. Most landlords require anywhere from 2 months to 6 months’ notice to satisfy the notice requirement.

Tenants should also take note that most leases have a separate notice provision where each party is required to follow specific instructions as to where and to whom any notice must be sent. Most notice provisions require notice by certified or registered mail to a predetermined recipient and address. We suggest following the notice provision; however, we highly recommend sending notices to the other party via certified and registered mail as well as email, so that you have evidence that you provided effective notice to the other party. We recommend having an attorney review the lease provisions and send the notice on your behalf to ensure that the landlord is notified properly.