Renewal Option Clause

Renewal

warning risk

both lease

The tenant's right to extend the lease and on what terms.

Tenant-friendly language

“Two 5-year options at 95% of fair market rent with a defined notice window.”

Landlord-friendly language

“Renewal at landlord's then-current asking rate; no option, just a right to negotiate.”

What to watch out for

Auto-renewal with no notice, renewal at 'market' undefined, short exercise windows.

How to negotiate

Define the renewal rent formula and exercise window; require landlord reminder for auto-renewals.

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