In our June 30 News ReLease titled "Withholding Rent: Gutsy
or Risky?", we considered whether a commercial tenant who was
withholding rent during the pandemic was simply being strategic.
Now we are frequently asked if tenants who accumulated arrears
during the pandemic might have thereby lost the right to exercise
their renewal options.
Preconditions to Renewal: What Does the Lease Say About
Default?
A lease will often set out specific preconditions that a tenant
must satisfy to exercise its renewal option.
A common precondition is that the tenant not be in default when
exercising its renewal option. Some renewal options require that a
tenant not be in default at the time of exercising its
option, while others may require the tenant not to have been in
default at any time during the lease. The Courts have
consistently stated that a tenant must strictly comply with any
prerequisites expressed in its lease in order to exercise its
renewal option.
