A renewal option allows one or both parties the right to extend the term of the agreement for an additional period under specified conditions. This clause typically outlines the procedure and notice requirements for exercising the option, along with any changes in terms or pricing for the renewal period.
Tenant shall exercise the First Renewal Option by furnishing Landlord written notice of Tenant’s exercise of the First Renewal Option (“First Renewal Notice”) by 5:00 p.m., Troy, Michigan time, on February 28, 2023. Landlord shall, within five (5) days of receipt of Tenant’s First Renewal Notice, deliver a Lease amendment solely documenting the new terms for the First Renewal Option as set forth above. Tenant shall promptly execute the amendment, thus confirming the exercise of the First Renewal Option. All of the other terms and conditions shall remain as provided in this Lease and Tenant shall occupy the Premises throughout the First Renewal Option in its then, as-is condition (subject to Landlord’s express obligations under the Lease). The First Renewal Option is personal to Tenant and shall not be assignable or transferable to any other party whatsoever.
Second Renewal Option. Provided (i) Tenant is not in default beyond any applicable grace or cure period as of the date of exercise of the Second Renewal Option (as hereinafter defined) nor at the date of the commencement of the Second Renewal Option; and (ii) Tenant has not sublet any part of the Premises or assigned any part of the Lease (except for assignments or subleases permitted under the Lease without Landlord’s consent), Tenant shall have the right to renew the term of the Lease for one period of five (5) years (“Second Renewal Option”), commencing September 1, 2028 (“Second Renewal Commencement Date”) and expiring August 31, 2033. During the term of the Second Renewal Option, Base Rent shall be at the following rates:
Renewal Option. Seller and Buyer hereby agree to Seller’s exercise of the Renewal Option (from August 19, 2019 to August 19, 2020) on the date hereof and agree that, subject to payment of the Renewal Standby Fee, the Availability Period Renewal Conditions are deemed to have been satisfied.
Seller shall have (A) one (1) option to extend the then-current Availability Period Expiration Date for a period of one (1) year (the “First Additional Renewal Option”) and (B) if Seller has exercised the First Additional Renewal Option, one (1) additional option to extend the then-current Availability Period Expiration Date for a period of one (1) year (the “Second Additional Renewal Option” and, together with the First Additional Renewal Option, collectively, the “Additional Renewal Options”): provided, that in either such case Seller has satisfied all of the conditions listed in clause (iii) below (collectively, the “Availability Period Renewal Conditions”). Any failure by Buyer to deliver such notice of approval of the Second Additional Renewal Option within thirty (30) calendar days from the date of Seller’s extension request shall be deemed a denial of Seller’s request for the Second Additional Renewal Option.
Renewal Options. Tenant is hereby granted three (3) five (5)-year options to renew the Lease (each option, a “Renewal Option”, and each renewal term, a “Renewal Term”), with each Renewal Term to commence immediately upon the expiration of the Extension Term, or then-current Renewal Term, as applicable, upon the same terms and conditions of the Lease, as amended hereby, except Base Rent during the Renewal Terms shall be as set forth in Section 3 below. Tenant shall give Landlord written notice of Tenant’s exercise of a Renewal Option at least ninety (90) days prior to the expiration of the Extension Term or then-current Renewal Term, as applicable (such notice, a “Renewal Notice”). Notwithstanding the foregoing or anything in the Lease to the contrary, should Tenant fail to timely provide a Renewal Notice, Landlord will notify Tenant in writing that it has missed the deadline and Tenant shall have ten (10) days after receipt of such notice from Landlord to provide Landlord with a Renewal Notice. If Tenant fails to provide such Renewal Notice to Landlord within such ten (10)-day period, Tenant’s Renewal Option (and any future Renewal Option) will be terminated and Tenant will be deemed to have waived its Renewal Option. The Renewal Options herein provided replace any option to renew or extend the Lease previously granted to Tenant under the Lease, including without limitation those granted at Section 2.d of the Lease; any such previously granted option to renew or extend is null and void. Tenant’s right to exercise any Renewal Option is subject to the condition that, on the date that Tenant delivers its Renewal Notice, Tenant is not in default under the Lease beyond the expiration of any applicable period of notice and cure.
Option to Renew. (a)Provided that (i) Tenant is not in default under the Lease beyond any applicable notice and cure periods and (ii) the Original Tenant (as defined below) continues to be in possession of the New Premises, both requirements being met as of the date of exercise of the Renewal Option and as of the Renewal Term Commencement Date (both as defined below), then Landlord and Tenant agree that during the Extension Term, Tenant shall have one (1) option to renew the Lease (the “Renewal Option”) for the entire Premises for a period of five (5) years (the “Renewal Term”), commencing on the first day following the expiration of the Extension Term (the “Renewal Term Commencement Date”). The Renewal Option is exercisable only by Tenant giving written notice thereof (“Renewal Notice”) to Landlord of its exercise of the Renewal Option at least nine (9) months, but not more than twelve (12) months, prior to the expiration of the Extension Term. If Tenant gives timely notice exercising the Renewal Option, the Term shall (subject to cancellation by Landlord for an Event of Default by Tenant as provided in the first sentence of this Section or Tenant’s withdrawal of Tenant’s notice exercising the Renewal Option as permitted by Section 3(b) below) automatically be extended by the Renewal Term. If Tenant does not timely give notice of its exercise of the Renewal Option, the Renewal Option shall expire and Tenant shall have no further right to extend or renew the Term. During the Renewal Term, this Lease and Tenant’s use and occupancy of the New Premises shall be on the terms provided in this Lease, except as follows: (i)The annual amount of Base Rent shall be the fair market annual Base Rent for space similar to the New Premises in comparable office buildings in southeast suburban Denver, determined as provided by Section 3(b) and Section 3(c) below. (ii)Tenant shall have no further Renewal Options or extensions options after the exercise of the Renewal Option.
Within fifteen (15) days of receiving Tenant’s notice of exercise of the Renewal Option, Landlord shall notify Tenant of the fair market Base Rent for the Renewal Term (“Landlord’s Rent Notice”) as determined by Landlord in good faith and upon comparable lease transactions. Landlord’s determination of the fair market Base Rent shall be reasonable and shall be based on the Market Rent (as defined below). Tenant shall have fifteen (15) days after receipt of Landlord’s Rent Notice to (i) withdraw Tenant’s notice exercising the Renewal Option, and if Tenant gives such a notice the Renewal Option shall terminate, there shall be no Renewal Term, and Tenant shall have no further right to extend or renew the Term, or (ii) notify Landlord that Tenant disputes Landlord’s determination of the Market Rent as set forth in Landlord’s Rent Notice (“Dispute Notice”). If Tenant does not timely withdraw its notice exercising the Renewal Option or if Tenant does not timely provide the Dispute Notice, Tenant shall have no further right to cancel or withdraw its exercise of the Renewal Option and the Base Rent for the Renewal Term shall be the amount or amounts set forth in Landlord’s Rent Notice.
Renewal Option. Landlord and Tenant hereby acknowledge that, except as modified by the last sentence of Paragraph 4 of this Amendment, Tenant’s renewal option pursuant to Section 11 of the Basic Lease Provisions and Exhibit D of this Lease remains in full force and effect.
The Lease provides for an initial term of seven (7) years effective January 1, 2021, and grants the Bank two (2) successive options to renew for a term of five (5) years each and one (1) successive option to renew for a term of three (3) years. In addition to certain maintenance, real estate taxes and other costs, the annual basic rent for each of the first five (5) years of the initial term is $54,000.00, followed by annual basic rent in years six (6) and seven (7) of the initial term in the amount of $60,000.00. Under the first renewal option term, annual basic rent for the first three (3) years of this option term would be $60,000.00, followed by annual basic rent in the amount of $66,000.00 for years four (4) and five (5) of this first renewal option term. Under the second renewal option term, annual basic rent for the first three (3) years of this option term would be $66,000.00, followed by annual rent in the amount of $72,000.00 for years four (4) and five (5) of this second renewal option term. Under the third renewal option term of three (3) years, annual basic rent would be $72,000.00.
The new lease has a term of seven years with a renewal option at the end of the initial term for an additional 3-year term, and a second renewal option thereafter for an additional 5-year term. As the sole tenant, we are responsible for all taxes, ordinary maintenance, snow removal and other ordinary operating expenses. Rent is $6.50 per square foot, increasing by $0.25 per year. We also have the right for during the first three years to buy a up to a 49% interest in Magic Research LLC for a price equal to 49% of the contributions received from other members.
Consolidated its four leases with Brookdale Senior Living Communities, Inc. into one master lease and extended the term by one year to December 31, 2021. The master lease provides three renewal options consisting of a four-year renewal option, a five-year renewal option and a 10-year renewal option. The notice period for the first renewal option is January 1, 2021 to April 30, 2021. The economic terms of rent remain the same as the consolidated rent terms under the previous four separate lease agreements.
Conditions to Renewal Option. Subtenant’s right under this Article 25 shall be subject to the conditions (all of which conditions are solely for Sublandlord’s benefit and may, in Sublandlord’s sole discretion, be waived) that (i) as of the date of Subtenant’s delivery of its Renewal Notice to Sublandlord. Subtenant shall not be in default under this Sublease, (ii) Subtenant must not have assigned this Sublease or sublet any portion of the Subleased Premises, and (iii) Subtenant must demonstrate to Sublandlord’s reasonable satisfaction that Subtenant’s creditworthiness is equal to or greater than that in effect when this Sublease was first executed by Sublandlord.
A Renewal Option is a clause commonly found in various contracts, giving a party the right to extend the term of the agreement beyond its original end date. This option provides flexibility and ensures continuity in relationships without the need to renegotiate and draft an entirely new contract. Renewal options are most often seen in lease agreements, service agreements, and employment contracts.
You should consider including a renewal option in a contract when:
Writing a renewal option includes specifying clear terms and conditions that will come into effect upon exercising this option. Here’s a step-by-step guide:
Duration of the Renewal: Clearly state the length of the renewal term (e.g., another year or more).
Notice Requirement: Detail how and when a party must notify the other if they wish to exercise the option (e.g., 90 days before the current term expires).
Conditions for Renewal: Specify any conditions that must be met for the renewal option to be valid. This could be standards of performance or punctual payment history.
Adjustment of Terms: Indicate whether and how terms of the original agreement may change. This might include rent increases indexed to inflation or adjustments in service fees.
Written Format: Make sure the renewal option is included as a written clause in the contract document to avoid potential disputes.
This lease may be renewed for an additional one-year term upon written notice by the tenant to the landlord no later than 90 days before the end of the current term. The renewal term will be subject to an annual rent increase of 5% over the then-current rent.
Renewal options are typically found in the following types of contracts:
Lease Agreements: Both residential and commercial leases often incorporate renewal options, allowing tenants to continue occupying the property under the terms set forth or adjusted slightly in the renewal clause.
Service Agreements: Companies may include renewal options in contracts with service providers or contractors to maintain ongoing service levels without renegotiation each year.
Employment Contracts: Some employment agreements use renewal options to extend the employment period under agreed terms and conditions.
Franchise Agreements: Franchisors might include a renewal option allowing franchisees to continue operating under the existing contract terms, depending on the franchisee’s performance and compliance with franchise standards.
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Dive deeper into the world of clauses and learn more about these other clauses that are used in real contracts.
The "Renewal Term" clause outlines the conditions under which a contract can be extended beyond its initial duration. It typically specifies the length of the renewal period, the notice requirements for opting into the renewal, and any changes in terms or pricing that may apply during the renewal period.
Rent abatement is a clause in a lease agreement that allows tenants to temporarily reduce or suspend rental payments under specific circumstances, such as when the property becomes uninhabitable due to damage or repairs. This clause ensures that tenants are not financially responsible for issues beyond their control while providing landlords time to address the situation.
The rent coverage ratio clause typically specifies the minimum ratio of a tenant's income or revenue to their rent obligations that must be maintained to ensure financial stability and mitigate default risk. This clause serves to protect landlords by ensuring that tenants consistently generate sufficient income to cover their rental payments.
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