Monday, September 24, 2007
Don't Forget the Right to Renew!
I just had a client call me in a panick because they had been advised by their Landlord that they would need to vacate their leased premises at the end of the initial term of their lease. The Tenant was shocked because they had negotiated a right to renew in the Lease and thought they had another 5 years. Unfortunately, they did not comply with one of the conditions to exercising this right, by providing the Landlord with 6 months advance written notice of its intention to do so. The Landlord took advantage of the oversight because it was able to lease out the entire floor of the building (which included my client's space) to a new tenant. Our client was stuck looking for new space. This can be a very difficult position to be in, as tenants often spend a great deal of money, up front, on leasehold improvements. Also, location can be extremely important to the ongoing success of a business. In this case, the Tenant turned the surprise into an opportunity and ended up purchasing new business premises, but the lesson is an important one. If you have a right to renew in your lease, make sure that you know what the conditions are to exercising it and diarize the proper dates to make sure you comply. That's good business.