For example, a start-up can rent office space for three years. A renewal option would allow the company to extend or renew the lease in order to remain in the offices beyond the three-year lease period. This can be beneficial for the company if it works well on the site, as it allows the company to stay for an additional mandate. In the absence of an extension option, the transaction could be ousted and another principle, which could, for example, offer more money, could instead collapse. Another problem they need to take into account, especially if you are acting for a tenant, are the restrictions incident to the first lease. This could be something simple, like a letter of support that allows the tenant to take dogs to work, or something more complicated, such as an accessory, allowing a tenant to insure the premises rather than the landlord. The renewed version expressly states that these letters are renewed at the same time as the renewal lease. Often, the renewal option will simply be tied to the lease and these valuable and highly negotiated ancillary agreements would be lost. For both residential and commercial tenants, it is important to understand the terms of a renewal option and negotiate for an option if it is not initially included in a tenancy agreement. The option generally specifies the date of notification of the renewal date, how the rent will be renewed or how it will be negotiated, the number of renewals allowed, the duration of each renewal and, if it exists, the initial terms of the lease will be excluded from the renewal. John moves into a new apartment and signs a lease that involves a renewal option.
The lease is for one year, and if John wishes to renew the lease for an additional year, he must notify his landlord two months before the lease expires. As of November 1, 2007, the parties entered into a lease for a commercial property in Paarl to operate the operations of a gas station. The agreement is expected to be for an initial term of five years, with a period of “5 years plus 5 years”. Initially, the rent was R18,000 per month and increased by 8% per year over the initial period. On February 5, 2014, Silver Joyce announced the respondent and stated that the 2012 agreement would be decided on June 30, 2014. On February 17, 2014, the respondent informed Silver Joyce that it had exercised the opportunity to renew the lease for a further two years (July 1, 2014 to June 30, 2016), pursuant to clauses 2 and 12 of the 2012 agreement.