Summary of an Article by Frichot Lawyers

Commercial leases often include an option clause allowing tenants to renew their lease under certain conditions. Although landlords aren’t obligated to offer renewal options, they often benefit both parties in maintaining a long-term commercial relationship. Understanding the process of exercising an option to renew is crucial for tenants.

When considering option renewal periods, tenants must notify the landlord within the specified timeframe, usually termed the ‘option exercise window.’ 

This notification must be in writing, following the lease agreement guidelines. 

After notification, the landlord acknowledges and prepares the new lease, either with the same terms or through a deed of renewal. Seeking legal advice is recommended to ensure favorable terms.

Diarizing the option renewal period is essential, typically falling three to six months before the lease term ends. 

Failing to exercise the option within this timeframe can lead to forfeiture, as courts strictly interpret renewal periods. While courts can override lease agreement requirements, it’s rare and costly.

Providing correct notice is crucial, following the lease agreement’s format, addressing the landlord, and complying with execution and timeframe requirements. Despite appearing straightforward, exercising an option can become complex, underscoring the need for legal advice.

In conclusion, exercising a commercial lease renewal option requires careful attention to formalities. Failure to comply may result in forfeiture of the option. 

Tenants should ensure the new lease reflects their current agreement or any variations. Seeking professional advice tailored to individual circumstances is crucial to understanding rights and responsibilities in lease renewal matters.

“This newsletter is intended to provide general information.

You should obtain professional advice before you undertake any course of action.”

Frichot Lawyers Fremantle
Level 1, Manning Buildings
135 High Street Mall, Fremantle WA 6160,
Email: reception@frichot.com.au

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