Renewing Your Commercial Lease

UPDATED: Jul 16, 2023Fact Checked

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UPDATED: Jul 16, 2023

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UPDATED: Jul 16, 2023Fact Checked

If your business is doing well and you are pleased with the commercial lease agreement with your landlord, you might want to extend your lease beyond the initial term. You do not expect to grow out of this space, you do not want to relocate, and you do not expect to downsize your business. Renewing your lease might be in your best interest.

Steps to Renewing Your Commercial Lease

If you are considering a renewal, first examine the terms of your existing lease agreement. It typically contains provisions to extend your lease. A renewal clause usually spells out the time frame required to give the landlord notice, if you want to exercise this option. It also typically indicates the length of the lease renewal period, and the rental rate. If you exercise this renewal clause, you should notify the landlord in writing to avoid any uncertainties about your decision and the renewal terms.

No Renewal Clause in Your Lease

Even if your present lease agreement makes no mention of an option to renew, you might still be able to continue your tenancy. Notify your landlord as soon as you are considering a renewal to extend your lease. Ideally, you have a good business relationship and can negotiate favorable terms to protect your interests.

You Cannot Renew

In some cases, the landlord will not grant you a renewal for your business. The property owner might have other plans for the property, has decided to sell, or is no longer interested in working with you. The owner might also want to change the rental terms drastically and work with new tenants. However, asking for a conversation about renewal, particularly if the commercial lease has been a positive experience for both sides, is always worth a try.

Case Studies: Commercial Lease Renewal

Case Study 1: Renewal With Existing Lease Terms

Adam owns a successful retail store and wants to extend his lease for another five years. He reviews his current lease agreement and finds a renewal clause that specifies the terms for extending the lease. Adam notifies his landlord in writing, expressing his intention to exercise the renewal option. After negotiating minor adjustments to the rental rate, Adam successfully renews his lease and continues operating his business in the same location.

Case Study 2: Negotiating Renewal Without a Renewal Clause

Lisa operates a small restaurant in a commercial space. Her lease agreement does not include a renewal clause, but Lisa wants to continue her tenancy. She informs her landlord early on about her intention to renew, emphasizing the positive relationship they have built. Through open communication and negotiation, Lisa and her landlord agree on a new lease term with updated rental terms. With the help of her attorney, Lisa finalizes the lease renewal and secures her business’s future in the same location.

Case Study 3: Landlord’s Decision not to Renew

Mark runs a boutique in a commercial building, and his lease is nearing its end. However, when Mark approaches his landlord about renewing the lease, he receives disappointing news. The landlord informs Mark that they have decided to sell the property and will not be renewing any leases. Despite Mark’s efforts to negotiate, the landlord remains firm in their decision. Mark seeks legal advice to explore alternative options, such as relocating his boutique to another suitable location.

Case Study 4: Seeking Legal Assistance for Lease Renewal

Emma owns a fitness studio and is interested in renewing her commercial lease. Aware of the complexities involved, she consults a commercial real estate lawyer to review her existing lease and advise her on the renewal process. The lawyer ensures that Emma fully understands her rights and obligations and makes necessary recommendations to protect her interests. With the lawyer’s guidance, Emma confidently navigates the lease renewal negotiations and successfully renews her lease on favorable terms.

Getting Help from a Real Estate Lawyer

Just as with your initial lease, it is a good idea to have your lease renewal agreement reviewed by a qualified commercial real estate lawyer. Your attorney can help clarify any existing terms in the lease that are unclear, and suggest additional provisions to more fully protect your rights as a business tenant.

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Jeffrey Johnson

Insurance Lawyer

Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

Insurance Lawyer

Mary Martin

Published Legal Expert

Mary Martin has been a legal writer and editor for over 20 years, responsible for ensuring that content is straightforward, correct, and helpful for the consumer. In addition, she worked on writing monthly newsletter columns for media, lawyers, and consumers. Ms. Martin also has experience with internal staff and HR operations. Mary was employed for almost 30 years by the nationwide legal publi...

Published Legal Expert

Editorial Guidelines: We are a free online resource for anyone interested in learning more about legal topics and insurance. Our goal is to be an objective, third-party resource for everything legal and insurance related. We update our site regularly, and all content is reviewed by experts.

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