Lease Renewal Agreement: Benefits and Essential Elements

ContractsCounsel has assisted 224 clients with lease renewal agreements and maintains a network of 171 real estate lawyers available daily. These lawyers collectively have 24 reviews to help you choose the best lawyer for your needs. Customers rate lawyers for lease renewal agreement matters 4.99.

A lease renewal agreement is a lawfully binding contract extending the term of an existing lease agreement between a tenant and a landlord or a property owner. This agreement offers certainty and clarity for both parties involved, summarizing the terms and conditions of the renewed lease agreement. In this blog post, we will discuss the different aspects of a lease renewal agreement, its essential components, and the importance of a well-drafted lease renewal agreement.

Essential Elements of a Lease Renewal Agreement

Some key elements of a lease renewal agreement are as follows:

• Defining Property Description: The lease renewal agreement must accurately define the rental property, including its permanent address and distinguishing features that set it apart from other commercial or residential properties.
• Stating Renewal Terms: The lease renewal agreement should clearly state the duration of the renewed lease, including the specific start and end dates. It is important to explicitly mention whether the renewal is for a fixed term or month-to-month basis.
• Outlining Rent and Payment Terms: The agreement should outline the amount of rent for the renewed lease term and specify the frequency of rent payments. It should also indicate any changes to the rent, such as an increase or decrease, and explain the acceptable payment methods.
• Specifying Maintenance and Repairs: The agreement should clearly define the responsibilities of the landlord and tenant regarding maintenance and repairs. It includes specifying which party is accountable for particular repairs, routine maintenance tasks, and the process for reporting and addressing maintenance issues.
• Including Termination and Renewal Terms: The lease renewal agreement must include key termination and renewal notice provisions. It should specify the timeframe within which either party must give notice if they intend to terminate or renew the lease at the end of the renewal term.
• Addressing Amendments and Addendums: The agreement should address any changes or additions to the original lease, explaining the terms of these modifications and how they impact the renewed lease.

Benefits of a Lease Renewal Agreement

Property owners who handle their properties can utilize online lease templates to fill out the necessary information. However, property managers or owners should consult a local attorney to verify the document's accuracy before sending it to the tenant. Below are some points that specify the importance of a lease renewal agreement.

• A lease renewal agreement usually functions as a clear and comprehensive summary of the rules for the lessee, as well as the obligations of both the lessor and the tenant. Unlike many agreements that can be made verbally, a lease renewal letter must be in writing to hold legal weight.
• Without a lease renewal form, tenants will lack clear guidance regarding their continued stay in the property. The lease renewal agreement acts as a guiding document that allows both the lessee and the landlord to agree on the same provisions and move forward accordingly.
• Renewing a lease allows landlords to retain their best tenants on flexible terms and ensure timely rent collection. Landlords typically prefer cooperative tenants capable of fulfilling primary property maintenance responsibilities.
• By utilizing lease renewal agreements, landlords can minimize the risk of prolonged vacancies that may convey a negative impression on the market. Also, landlords can create and finalize lease renewals on the same day if the tenant approves the offered terms and agrees to sign the document.

Umar F.

Peter L.

Steven S.

Scott S.

How to Draft a Lease Renewal Agreement

Below are the steps required to draft a legally valid lease renewal agreement:

1. Evaluating the Existing Lease Agreement: The initial step in preparing a lease renewal agreement is carefully examining the current lease's important provisions. Familiarize yourself with the terms and conditions, such as lease duration, rental amount, maintenance responsibilities, and other relevant terms. It will establish the groundwork for the renewal agreement and help identify areas that require revision or updating.
2. Initiating Communication with the Tenant: Initiate a conversation with the tenant before the lease expiration date. Inquire about their interest in renewing the lease and address any concerns or questions they may have. Establishing open lines of communication is important for ensuring a smooth lease renewal process.
3. Assessing Market Conditions: Research the prevailing rental market conditions in your area. This step will aid in determining whether a rent increase is justified or whether the existing rental rate should be maintained. Consider factors such as market demand, property value, inflation, and any improvements made to the property since the original lease agreement.
4. Negotiating Terms and Conditions: This may involve discussing the rental rate, lease duration, renewal options, maintenance responsibilities, and other relevant clauses.
5. Preparing the Renewal Agreement: It is time to draft the lease renewal agreement once the negotiations are concluded. Include both parties' names and contact information, the property's address, the renewal term, and the rental amount. Additionally, incorporate any revisions or updates agreed upon during the negotiation process.
6. Including Necessary Clauses: To safeguard the interests of both parties, consider incorporating specific clauses into the renewal agreement. These may include clauses about maintenance responsibilities, penalties for late payments, subletting, pet policies, and termination conditions. These clauses should be clear, concise, and according to the applicable laws.
7. Sharing the Draft: The next step is to share the draft renewal agreement with the tenant for review. Also, you must encourage them to read and comprehend all the terms and conditions thoroughly. Address any questions or concerns they may have before finalizing the agreement. Once both parties are satisfied with the terms, sign the lease renewal agreement to establish its legal validity.
8. Retaining Copies: After signing, make copies of the lease renewal agreement for the landlord and tenant. Keep the original document in a safe and easily accessible place. It ensures both parties have documented evidence of the renewed lease and its terms.

Key Terms for Lease Renewal Agreements

• Lessor: The individual who owns the property or acts as the landlord and grants the lease to the tenant.
• Duration: The length of time the lease agreement covers, including the initial term and any possible extensions.
• Rent Adjustment: A clause in the lease renewal agreement that permits the landlord to increase the rent for the renewed lease term.
• Notification Period: The designated timeframe within which the landlord or the tenant must give prior notice to express their intention to extend or terminate the lease.
• Deposit: A refundable sum of money paid by the tenant to the landlord, serving as a safeguard against potential damages or unpaid rent throughout the lease term, carried forward to the renewed lease.
• Terms and Conditions: The specific terms, provisions, and regulations that govern the lease renewal, encompassing any modifications or additions made to the original lease agreement.

Final Thoughts on Lease Renewal Agreements

A lease renewal agreement is a necessary document that facilitates the extension of a tenant's stay in a rental property. Also, by clearly defining the terms and conditions of the renewed lease, a lease renewal agreement provides safety and stability for both owners and tenants. Ensuring that the renewal agreement contains all the necessary components and is well-drafted is essential for maintaining a positive landlord-tenant relationship and avoiding potential disagreements.

If you want free pricing proposals from vetted lawyers that are 60% less than typical law firms, Click here to get started. By comparing multiple proposals for free, you can save the time and stress of finding a quality lawyer for your business needs.

ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.

Need help with a Lease Renewal Agreement?

Meet some of our Lease Renewal Agreement Lawyers

Charlton M.

Charlton M.

Charlton Messer helps businesses and their owners with general counsel and contract drafting services. He has helped over 500 businesses with their legal needs across a variety of industries in nearly a decade of practice.

Rebecca S.

Rebecca S.

I absolutely love helping my clients buy their first home, sell their starters, upgrade to their next big adventure, or transition to their next phase of life. The confidence my clients have going into a transaction and through the whole process is one of the most rewarding aspects of practicing this type of law. My very first class in law school was property law, and let me tell you, this was like nothing I’d ever experienced. I remember vividly cracking open that big red book and staring at the pages not having the faintest idea what I was actually reading. Despite those initial scary moments, I grew to love property law. My obsession with real estate law was solidified when I was working in Virginia at a law firm outside DC. I ran the settlement (escrow) department and learned the ins and outs of transactions and the unique needs of the parties. My husband and I bought our first home in Virginia in 2012 and despite being an attorney, there was so much we didn’t know, especially when it came to our HOA and our mortgage. Our real estate agent was a wonderful resource for finding our home and negotiating some of the key terms, but there was something missing in the process. I’ve spent the last 10 years helping those who were in the same situation we were in better understand the process.

Jeffrey W.

Jeffrey W.

I am a business, transactions, contracts attorney. I enjoy writing, reading, and editing contracts. I want to read your contract.

Julian H.

Julian H.

I am a business attorney with years of experience advising individual entrepreneurs and small businesses on issues ranging from entity selection/formation to employment law compliance, to intellectual property protection and exploitation. I often act as General Counsel for my clients fulfilling the legal function as part of a team of managers. I look forward to learning more about your business and how I may be of assistance.

Christopher R.

Christopher R.

Corporate and transactional attorney in sixth year of practice. Focus areas include general corporate counsel, labor and employment law, business partnership matters, securities matters related to privately-held companies, and regulatory compliance in securities and finance matters.

Forest H.

Forest H.

Forest is a general practice lawyer. He provides legal advice regarding small business law, contracts, estates and trusts, administrative law, corporate governance and compliance. Forest practiced complex commercial litigation in Florida for eight years, representing clients such as Host Marriott, Kellogg School of Business, and Toyota. Since moving to Nashville in 2005, he has provided legal advice to clients forming new businesses, planning for the future, and seeking funding through the use of equity and/or debt in their businesses. This advice has included the selection of business type, assistance in drafting and editing their business plans and offering material, reviewing proposed term sheets, and conducting due diligence. Forest is a member of the Florida, Tennessee, and Texas Bars; in addition. Forest has held a Series 7, General Securities Representative Exam, Series 24, General Securities Principal, and Series 63, Uniform Securities Agent State Law.

Anjali S.

Anjali S.

CA, NY, and FL licensed attorney with nearly a decade of experience in intellectual property, data privacy, commercial contracts, and employment. I also have both the CIPP/US and CIPP/E privacy credentials. Basically, everything your business needs!

Find the best lawyer for your project

Lease Renewal Agreement

Can a tenant renew the lease?

I am currently renting a property under a lease agreement that is set to expire soon. I am interested in continuing to rent the property for another term, but I am unsure if I have the legal right to renew the lease or if I need to negotiate a new lease agreement with my landlord. Therefore, I would like to seek the advice of a lawyer to clarify my options for continuing my tenancy.

Jeffrey K.

You need to review your lease agreement. There may be a section that discusses renewal. Some leases are silent, other contemplate automatic renewal and others will have a specific renewal procedure. If your lease has no renewal language, the lease will terminate at the end of the term. If that is the case, you should speak to your landlord about entering into a new lease, whether under the same terms or different terms. If the lease renews automatically, you most likely have to do nothing (if there is a procedure in the automatic renewal language, follow that procedure). If there is a specific procedure to renew, you must follow that procedure. Your lease may also state that if you remain in the property after the lease expires you will be treated as a month-to-month tenant and the terms of your lease (include rent rate) will remain. The landlord or tenant in that case can terminate the month-to-month tenancy with 30 days notice from the date the rent is due. If your rent is due July 1, 2023 and, as a month-to-month tenant, you want to move out, you would notify your landlord in writing on July 1, 2023 that July is the last month you are renting from him and you will be moving out on July 31, 2023. Likewise the landlord can notify you on July 1, 2023 that July is your last month or could change the terms (such as a rent increase) effective August 1, 2023 because the tenancy is month-to-month. There is also the possibility that you would not be considered a month-to-month tenant, but a "holdover tenant". Again, check the lease for these terms. If you are a holdover tenant, the landlord would include in the lease a rental increase for holdover tenants. This is still technically a month-to-month tenancy but on more expensive terms and the landlord most likely will want you out. Check your lease for renewal provisions and follow them. If you have questions, speak to your landlord. Open communication is important in situations like this.