When an “Option to Renew a Lease” is exercised, make sure it’s clear
Both landlords and tenants should make sure that when an “option to renew” is exercised, it is in strict accordance with the terms of the lease, and is clear and explicit.
This is an important subject for both landlords and tenants, and it is really beyond my one minute introduction here.
The important thing to remember for both landlords and tenants is that Options to Renew must be exercised strictly in accordance to their lease terms. The courts say that it must be clear, explicit, unambiguous, and unequivocal.
A few examples come to mind:
In one case, a court looked at whether a tenant gave proper notice when renewing their lease and the only issue was whether or not the tenant had exercised the renewal option as it was stipulated in the lease.
In this particular case, the tenant had written to the landlord prior to their renewal deadline, giving notice of their intention to renew. The landlord wanted the courts to enforce the fact that the tenant had in fact renewed, but what happened was that the courts ruled that giving notice of their “intention” to renew was not renewing. The courts ruled that the notice was ambiguous and equivocal and therefore dismissed the landlords claim.
In another case, a tenant brought a case against a landlord for damages from being forced to move to a new location after the first term of the lease ended. The issue was whether or not a letter from the tenant was a valid exercise of their option to renew. The landlord’s lease contained a standard lease renewal clause but when the tenant wrote their letter to the landlord exercising their option, they added a number of other requirements that the landlord did not agree with.
In this case, “the exercise of an option to renew with conditions in favour of the tenant – not provided for in the lease – will not bind the landlord unless the landlord accepts the additional conditions.”
The courts in this case said that the circumstances of the tenant’s renewal letter were not clear and ambiguous.
The take home messages to landlords and tenants are two things:
- When you are exercising your option to renew your lease, make sure you are doing it strictly in accordance with the terms of the lease.
- Make sure it is clear, explicit, unambiguous and unequivocal.
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