Options to Renew Leases

Many commercial leases contain a provision for renewal for a further term, at a new rent to be determined by arbitration or otherwise. The leases usually provide that the option can be exercised by giving notice in writing of the tenant’s intention to do so at least three months, or some other period, before the end of the original term.

Usually the option is made subject to prompt payment of rents and performance of all the covenants in the lease. However, courts can be very permissive, and will often find a way to excuse minor breaches of the lease, or occasional late payment of rent.

Even the requirement of notice in writing is not sacrosanct. The courts have held that if the landlord gave the impression he understood the lease would be renewed, or that the tenant need not give formal notice, the tenant may be excused from giving notice in writing. Courts have also held that if the landlord continued to accept rent, he might be deemed to have waived minor breaches.

The result is that if the landlord intends to rely on strict compliance with the notice provisions, he should ensure the tenant knows his position, and if the tenant wishes to renew, he should make sure he complies with the lease, BUT if he overlooks the notice requirement, there is still hope the lease will be renewable.

Contact Andy Sandilands at DuMoulin Boskovich LLP for your legal needs.