Tenants should be aware of the following when exercising an option in a lease:

• the terms and conditions of the option, including the length of the option period, when the option period ends and the conditions that must be met in order to exercise the option;
• the cost of exercising the option, including any fees or penalties that may apply;
• the change in commercial terms, is there to be a market review of the rent? If so, can you afford it?
• the terms of the new lease that will take effect if the option is exercised, including the length of the lease and the rent that will be charged;
• any restrictions or limitations on the use of the property that may apply under the new lease;
• the potential impact of exercising the option on the tenant’s business or operations; and
• the possibility of negotiation with landlord for any changes in the lease agreement.

It is always advisable to have a legal expert review the lease agreement before exercising the option.

Do you have an option in your lease? Do you know when it must be exercised by and how?

If you are unsure, please contact the team at Arena Law who are available to advise on your rights under the lease in a practical and commercial manner.