Lease Extensions

A lease extension refers to a legal agreement that extends the term of an existing lease or rental agreement. Extensions are not a requirement in a business relationship but are often granted just before an original agreement is set to expire. They are common in relationships between landlords and tenants of commercial and residential property, or between parties who lease vehicles, machinery, plants, and equipment.
KEY POINTS:
- A lease extension refers to a legal agreement that extends the term of an existing lease or rental agreement.

- The lease extension should name the parties involved, the dates on which the extension begins and ends, and should reference the earlier agreement being extended.

- Lease extensions are common in landlord-tenant relationships, or for the use of vehicles, equipment, machinery, and/or plants.

A lease is a contract that requires the lessee, or the user, to pay the lessor, or owner, for the use of an asset for a specified period of time. Leases are common for rental properties or for the use of equipment, vehicles, or machinery and plants. When the asset being rented is tangible property, it may also be referred to as a rental agreement.

When a lease expires, both the lessor and the lessee have a few options available. The lessee can vacate or give up access to the property, or the two parties can agree to a lease renewal. This option may require some renegotiation of the terms of the new lease. The final option is to extend the lease. The terms of the original lease are normally still in force, but the time-frame for an extension tends to be shorter. So in the case of a residential rental property, the landlord may keep some of the original lease terms like the rental amount due, but extend the period of tenancy for the lessee.

The lease extension is a formal document that must include certain details. It should name all the parties involved in the agreement, as well as the dates on which the extension begins and ends. The extension document should also reference the earlier agreement being extended. Some lease extensions—especially in real estate—are granted automatically. They may specify a certain length of time for the extension or may allow for the use of the property on a month-to-month basis.

To extend your lease or just make an enquiry, please do not hesitate to contact us today!