Exercising a Lease Option

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Is the term of your lease coming to an end? Do you have the option to renew your lease for a further term? If so, it is important that you do it right.

Exercising an option to renew a lease can appear to be a simple formality however in most cases there are specific requirements when giving notice that need to be done to ensure you do it right.

If the question of a valid exercise an option to renew is ever brought before a Court, you will need to show there has been a “clear and unequivocal” intention to renew your lease. Your lease should state how you must give notice so the first thing you need to do is know when you must give notice to renew your lease – timing is essential.

The best way to make sure you do it right is to:

  1. Diarise when your lease renewal date;
  2. Know when the time to serve notice will expire;
  3. Make sure you know who and where you must serve notice – this is usually the Lessor however the Lessor may have nominated an agent;
  4. Don’t just use a phone to tell the Lessor that you want to renew your lease, put it in writing – this can be done by email or a letter provided the notice includes the tenants full name and address (even if it is your email address) and the address of the property;
  5. Confirm “clearly and unequivocally” that you will be renewing your lease in the notice.

You should not use your right to exercise a new lease as a tool to negotiate new lease terms. If you wish to vary your lease terms, you should do so in a separate communication with the Lessor. There have been cases where the Courts have ruled that new terms and conditions requested by a tenant when giving notice were viewed as a condition of the renewal and if the changes are not accepted, the tenant wouldn’t be exercising their right of renewal. You don’t want your intention to renew to be seen as a qualification or create ambiguity.

So remember don’t create confusion, be clear of your intention and put any complications beyond doubt – or come and speak with to us.

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