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An Option to Renew a Lease can be a valuable asset for a Retail Tenant as it allows the Tenant to seek a further Lease from the Landlord on the same terms as the current Lease. However, it is critically important that the option is properly exercised if you plan to take advantage of it.
Issues surrounding options to renew leases are some of the more commonly litigated lease disputes, and you need to be mindful of the process and the timelines which are involved with the exercise of an option.
This cannot be overstated. It is crucial that you serve your written notice of exercise of option within the times stated on the Lease. If you serve the notice a day early or a day late the Landlord can refuse to grant you the option on the Lease. There is also no obligation on the Landlord to advise you that the notice period has either started or is due to expire soon.
The notice must be served on the Landlord or its agent in accordance with the requirements for service outlined in the Lease and the intention to renew the Lease must be explicitly stated.
Once you have validly exercised the option to renew the Lease as a Tenant you are contractually obliged to continue with the Lease even if any new terms (such as rent) allowed under the original Lease are not determined by the Commencing Date of the new Lease.
If you have complied with all of the requirements for the valid exercise of your option to renew the lease then the Landlord will issue you with a new Lease. You should seek legal advice to ensure that your option Lease has been correctly drafted and on the same or similar terms to the existing Lease.