Option to Extend Lease Agreement

Option to Extend Lease Agreement

An Option to Extend Lease Agreement is a contractual provision that grants a tenant the right, but not the obligation, to extend the duration of a lease for an additional term at the end of the original lease period. This option is typically included in the lease agreement and is advantageous for tenants who wish to secure their occupancy of the property without committing to a long-term lease upfront.

The Option to Extend typically outlines specific terms such as the duration of the extension, how much notice must be given to exercise the option, and any changes to the rental rate during the extension period. For example, a tenant might have the right to extend their lease for an additional five years by providing written notice to the landlord at least 90 days before the lease expiration.

This type of option can provide tenants with a sense of security in their living or business arrangements, as it allows them to retain the property if their circumstances remain favorable while also allowing for potential renegotiation of terms based on market conditions at the time of extension.

From the landlord’s perspective, including an Option to Extend can make a property more attractive to potential tenants, potentially reducing vacancy rates and providing stability in rental income.