Lease options come in many flavors; a tenant can have an option to renew, an option to expand, an option to terminate, or an option to purchase just to name some of the more common options which are negotiated into deals. Options also exist as first rights to negotiate or first rights of refusal.

For the purpose of this post we’ll focus on options to renew and when tenants should exercise them. When a lease option is negotiated, the language in the lease most often is generally centered around giving the tenant the right to continue or extend their lease at either a pre-determined rate or at a rate adjusted for fair market value. These options often must be exercised months (and in some cases more than a year for large users) in advance.

If a tenant fails to exercise their option Read the rest of this entry »