A lease option is something that can baffle new landlords and tenants alike, and we still find aspects of options are misunderstood by seasoned landlords and tenants. But if you want to ensure a successful tenancy – regardless of which side you're on – you need to understand how options work and what your rights and responsibilities are.
What is a lease option?
A lease option is an inbuilt contractual right for a tenant to ask the landlord for a further lease term, for a certain number of years, and if notice ‘exercising' the option is given by the tenant to the landlord, the landlord is unable to deny that further term except in very limited circumstances.
For example, the lease might be for an initial term of 3 years but it then contains two, 3 year options – if those are exercised by the tenant in accordance with the terms of the lease, the tenant has the right to be in the premises for 9 years in total.
