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Commercial Leases: Options to Renew

Business Lawyers Sydney

If your intention is to give your tenant just the single option to renew the commercial lease, great care should be exercised to ensure that your intention is properly expressed in the lease.

In a recent matter, the commercial lease contained the following clause:

“Should the Lessee wish to take a further Lease of the Premises for a further term of 3 years from the expiration of the term of this Lease and of such wish shall prior to the expiration of the term give to the Lessor not less than 3 months’ notice in writing, the Lessor will demise to the Lessee for a further term of 3 years on the same terms as this Lease, at a rental to be agreed upon by the parties.”

The clause did not go on to say that the clause quoted was to be removed from the new lease.

Without that clause being expressly removed from the option lease, the lease would be able to be renewed time and time again by the Lessee, until the Lessee decided that it no longer wanted to lease the premises.

This was not what the Lessor intended. The Lessor intended that the Lessee have the right to renew the lease once only – but that was not achieved.

Care is needed to ensure that the lease properly expresses what was intended by the parties.

Contact a member of our Property Law Team for your leasing requirements.


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