Why is this important for an auto-renewal clause? Two reasons: Depending on the landlord`s preference, a simple lease extension may be sent to the tenant or the landlord may decide to rewrite a brand new lease for the tenant. If the landlord opts for the landlord, a letter must be sent to the tenant stating the following: It is common for both the landlord and tenant to include an extension clause in a lease. Such a clause generally allows a tenant to extend the term of the lease for another term on the same terms as the original term. Failure to read or understand this clause is not a defence, especially in a commercial situation. (For residential leases, a law requires that a reference to automatic renewal clauses be clearly displayed just before the tenant signs.) Note: The extension clause in your lease sets out the type of notice this practice must give to the landlord. The notice must be given in writing and there is a time limit set in the lease. Often, you need to check your intention six to twelve months before the end of the lease. The deadline is one of the areas of the clause that can be negotiated, and the more flexible the notice period, the more advantageous it is in practice. For both residences and businesses, it is important to understand the terms of an extension option and negotiate for one if it is not originally included in a lease. (b) extension period.

Unless this Agreement is terminated earlier, it will be renewed at the end of the original term and will continue thereafter for consecutive periods of the year, provided that such continuation is expressly authorized at least once a year, (i) by the Heartland Board of Directors or (ii) by a majority of the outstanding voting securities of the relevant Heartland Fund, provided that, in both cases, continuance is also granted by a majority of the Directors of Heartland who are not interested persons (within the meaning of the 1940 Act) of a Party to this Agreement shall be approved by a vote cast in person at a meeting called for the purpose of voting on such approval. If a plan is in effect under Rule 12b-1 of the 1940 Act (if any), the continuation of the Plan and this Agreement must be approved at least once a year by a majority of the directors of Heartland who are not interested persons (within the meaning of the 1940 Act) and who have no financial interest in the implementation of such a plan or in agreements related to such a plan. be delivered in person at a meeting called for the purpose of voting on such consent. The lease was subsequently extended two more times. The tenant attempted to exercise the extension option for the third time, but the landlord claimed that he was available for the proposed extension at an agreed rent of R150,000 per month, including VAT. The tenant argued that a fair rent was an 8% increase per year in the rent then in effect. As a rule, the rent is maintained at the same price. Sometimes the rent is adjusted by a formula, e.B.

by a change in the consumer price index. This is one of the conditions that the landowner and tenant should negotiate. The best way to negotiate a fair clause is to hire a lawyer who excels in commercial leases. At Dental and Medical Counsel, we work specifically with dental and medical practices to negotiate the best terms of the agreement to protect your practice. Contact us today to learn more. Renewal options can also be important for negotiating trade agreements. Companies that regularly offer goods or services as part of a third-party agreement may want to include a renewal option in their trade agreements to support long-term work. 6.3 The tenant must request such an extension in writing from the lessor no later than 6 (six) months before the end of the rental period. The landlord will remind the tenant to exercise option 8 (eight) months before the end of the rental period.

Few problems surprise landlords and tenants as much as an auto-renewal provision in a lease. Supposedly, in order to ensure and protect an ongoing relationship between the landlord and tenant, these provisions usually surprise only one or more parties and force them to another term that they were not interested in. What`s even smarter is that these provisions are sometimes introduced by landlords who hope their tenants simply “forget” that they had to announce their intention not to renew a lease. Many tenants, both commercial and residential, may suddenly find themselves on the hook for another full year or more and may not be able to move to a more desirable location. Such a clause was again the subject of a recent supreme court of appeal (SCA) proceeding in Shepherd Real Estate Investments (Pty) Ltd v. Roux Le Roux Motors CC (1318/2018) [2019] ZASCA 178 (2 December 2019). The renewal option includes information on how to renew or renew your lease. It also contains information on how to cancel if you do not intend to renew. The following are some of the basic elements that will be contained in the extension clause: 2. Notwithstanding anything to the contrary in the Lease, the Renter hereby has the exclusive right and opportunity to extend the Term by eight (8) additional terms by five (5) years of rental each on the same Te1ms and conditions as set forth herein, except as otherwise provided herein….

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