It is common in commercial lease agreements to contain an option
for the tenant to continue its occupancy of the premises beyond the
initial term. When that kind of option is granted, the landlord and
tenant should pay careful attention to whether the lease provides
the tenant with either a right to renew or extend the lease,
because those terms provide for distinctly different rights and
obligations in the resulting lease agreements after the tenant has
exercised its option.
Under a lease renewal, there is a "legal instant in
time" between the expiration of the original term and the
commencement of the renewal term of the lease agreement. Due to
this brief cessation of a leasing relationship between the parties,
a lease renewal legally creates a new lease agreement between the
parties. However, unlike a lease renewal, exercising an option to
extend the lease is considered to be a continuation of the original
lease, without interruption, and no new agreement is
