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DO OPTIONS SPRING ETERNAL?

A reader sent us the following question:

I am currently involved in a situation regarding a renewal option which simply states: "tenant has the right to renew the terms of this lease no later than 3 months before expiration."

Does this vague language give the tenant the rights for as many renewal periods as he chooses and does it mean that the rent schedule for the renewal period reverts back to the original rent in the the original lease which was ten years ago?

My tenant believes he has this right in perpetuity of extensions and resetting the rental rate back to the original each time.

This is very important to me. Can you give me advice?

-Tom M.

No, Tom. I can't.

Unfortunately, this isn't the appropriate forum for dispensing (or securing) legal advice.

In order to best address your concerns, you should meet with an attorney as soon as possible. That individual will need to ask you a few questions, and will also have to review the governing agreement (and any other documents of pertinence) before offering you any kind of substantive opinion or analysis.

With that said, generally speaking, the law disfavors leases that run "forever." [In fact, by way of some perfunctory research, there's a  1981 AD1 case (DeSantis v. Kessler) which suggests that generalized language allowing a tenant to renew upon the "same terms as contained in original lease" does NOT trigger a perpetual right.]

And, when the operative language is viewed as ambiguous, courts are even less inclined to enforce such "options."

In this particular instance, the quote which you have supplied certainly leaves much to be desired.

It is unclear whether the tenant is entitled to a renewal on the "same" terms and conditions, or whether it merely affords the tenant an ability to negotiate a renewal with you three months prior to the lease's expiration. (In the latter instance, the renewal language would comprise what is known as an "agreement to agree" -- which may not be considered an enforceable "renewal" at all.)

Get thee to an attorney!

Here's wishing you the desired closure.

Onward!

To view our related blog posts on this topic, please use this link: Options
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Please keep in mind that his forum is intended to provide readers with generalized information and commentary. Thus, the foregoing response is not intended to constitute legal advice nor serve as a definitive response to the question presented.

Never act on information secured from the Internet. Always consult with an appropriate professional.

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