Important things to consider when renewing your lease
It is very important to check your contract when renewing your lease and if you are not careful, you may fall into several traps. Hospitality accountants Sky Accountants, give tips on potential traps to avoid in your leasing contract.
For one, the option window is the period from the first date to the last date set for the “exercise of the option.” During this period, the tenant can take up the additional lease period and serve a written notice to the landlord. This is very technical and should be checked early on. If you get it wrong, the whole exercise of the option will be invalid. You have to properly talk to your landlord, otherwise, you may lose a thriving business if you don’t have a lease in case the landlord asks you to leave or charge exorbitant rent. Remember to set a reminder as the option window nears to avoid mistakes.
Meanwhile, your landlord will decide on the market rent review when you’re about to renew your lease. They will assess the same premises in the same market to decide a suitable lease. Your lease will increase every year by consumer price index or a fixed percent. Landlords often require a market review upon renewal so if you can, make sure you just have a fixed increase in your lease. You may not get to avoid the increase but at least there’s some certainty.
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For those who have a market rent review, talk to your landlord about it even before the option window so you have enough time to negotiate. Check your lease now to see if you have a market rent review or fixed increase on the exercise option.
Lastly, one of the common tenant mistakes is giving improper notice. Remember that legal procedures cannot be executed through email because properties are involved in leases and properties practice traditional law. Leases have to be in writing, signed and delivered so you should avoid texting or emailing your landlord. Check the rules when it comes to serving proper notice. Even if you do it on time but send it incorrectly, you may still have a misunderstanding and the landlord may even ask you to vacate the premises.
Know the repercussions and terminology to err on the side of caution and consult with experts before taking any actions.
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