Options to extend or renew a lease are essentially the same. They give the tenant the ability, prior to the conclusion of the lease term, to continue leasing the premises. An option to renew or extend the lease means that upon the tenant’s exercise of the option (choice), the provisions of the agreed-upon option are adopted for another defined term. The terms of the option can include the length of the new term, a change in rent, and other modifications. If the option rests with the tenant to ask for a renewal, the landlord is obligated to agree under the terms of the option. If there is no option to renew in the agreement, then there is no obligation for either party to renew the lease.
The option typically delineates the timing of notification for extension, what the rent will be under the extension or how it will be negotiated, the number of permissible extensions, how long each extension will be, and which, if any, of the original terms of the lease will be excluded from the extension.