What are the most important contingencies to include in a real estate lease renewal agreement?

2 Early Termination

Another important contingency in a lease renewal agreement is an early termination clause, which allows you to end the lease before the expiration date without incurring a penalty or a breach of contract. For example, you can include a clause that gives you the right to terminate the lease if your business relocates, downsizes, merges, or closes. This way, you can avoid paying rent for a space that you no longer need or use, and have more flexibility and mobility in your business operations. However, you should also be aware of the notice period, the termination fee, and the conditions and limitations of the early termination clause.

3 Expansion and Contraction

A third important contingency in a lease renewal agreement is an expansion and contraction clause, which allows you to increase or decrease the size of your leased space according to your business needs. For example, you can include a clause that gives you the option to lease additional space in the same building or complex, or to sublease or surrender part of your space to another tenant. This way, you can accommodate your growth or contraction plans, and optimize your space utilization and efficiency. However, you should also be mindful of the availability, price, and quality of the additional or subleased space, as well as the approval and consent of the landlord and other tenants.

4 Tenant Improvements

A fourth important contingency in a lease renewal agreement is a tenant improvement clause, which allows you to make alterations or renovations to your leased space to suit your preferences and requirements. For example, you can include a clause that specifies the scope, cost, and timeline of the tenant improvements, as well as the responsibility and ownership of the improvements. This way, you can customize your space to enhance your productivity, comfort, and branding, and potentially increase the value of the property. However, you should also be cautious about the permits, regulations, and standards of the tenant improvements, as well as the impact on the rent and the lease term.

5 Force Majeure

A fifth important contingency in a lease renewal agreement is a force majeure clause, which allows you to suspend or terminate the lease in the event of an unforeseen and unavoidable circumstance that prevents you from fulfilling your obligations. For example, you can include a clause that covers situations such as natural disasters, wars, riots, strikes, epidemics, or government actions. This way, you can protect yourself from liability, loss, or damage caused by events that are beyond your control, and preserve your rights and interests under the lease. However, you should also be clear about the definition, duration, and effects of the force majeure clause, as well as the remedies and obligations of both parties.