Safeguarding a Tenant's Option to Renew a Commercial Lease

An interest in land created by a lease can be a valuable asset and must be protected. Commercial leases often include an option to allow the lease to be extended. There are generally strict requirements to be met to exercise the option. These requirements can include the method of giving notice, the notice period before the expiry of the lease and the address for service.

Failure to comply with the notice requirements can mean the lessee would need to rely on the goodwill of the lessor who will no longer be obliged to grant a further term. If the parties cannot agree, this may result in litigation.

Are the Terms of a Lease Open to Interpretation?

As seen in Kegran Pty Ltd v Warrik Pty Ltd (2018) the terms of a lease, when read as a whole, can be open to interpretation. (See Was Exercising an Option to Renew a Commercial Lease by Email Valid?.).

Nevertheless, tenants should follow the specific obligations in the lease when exercising an option to renew:

• Serve the notice within the timeframe specified;
• Clearly express the intention to exercise the option;
• Ensure the notice of the exercise has been received by the landlord;
• Use the method of service as specified within the lease.

We can assist clients with negotiating leases, advise on validly exercising any option, or undertake commercial lease dispute litigation on their behalf.

Contact our Commercial Property Lawyers, Sydney, NSW

Szabo & Associates Solicitors have a wide breadth of experience in advising on commercial property matters and disputes. If you need our help, please contact us on 02 9281 5088 or fill in our online contact form.