26 October 2018
Leases - Option to renew
I am acting for a lessee whose lease term ended about two weeks ago.
The client was busy with his business and forgot to exercise the option to renew, no earlier than 6 months and no later than 3 months prior to its expiration, which was expressed in the lease for a further term of 5 years.
The client definitely wishes to secure his lease term for at least the further 5 years that he was meant to secure by the option to renew.
What would be the best option for the client in this current situation?
Thank you for the question.
The following is extracted from the By Lawyers New South Wales Leases commentary:
Option to renew
Traditionally courts have construed time limits strictly and a late exercise will be invalid…
…A lessee may not be entitled to protection when even just one day late…
…Late exercise of an option, whilst ineffective in itself, may constitute an offer to enter into a new lease and the lessor’s acceptance may constitute an agreement for a new lease.
Proceed to request a new lease on the same terms, or substantially the same terms, as the previous lease.
Regards
Mentor
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