Beware Of Uncertainty In Option To Renew Clauses

In Bermuda, there is no automatic right for a tenant to renew a lease at the end of the lease period. Instead, an option to renew is often written into a lease in order to compensate for the lack of an automatic renewal right.

An option to renew is the right to require a new lease, on expiry of an existing lease. Either a landlord, or a landlord and a tenant mutually -- or usually a tenant alone due to the language in most leases -- has an option to renew.

Options to renew in commercial leases are usually explicitly written to favour a tenant. In today's market, a would-be tenant usually has stronger bargaining power than a landlord, so typically the commercial tenant is given the opportunity to renew as an inducement to sign a lease.