Pitfalls Related to Renewing a Lease
Provided by HG.org
Renewing a lease is complicated when the tenant does not know what to look out for in clauses and conditions that are added or changed with the renewal. Because of these issues, it is imperative that the tenant read through and become aware of everything in the new terms as well as communicate with a lawyer to consider the best option moving forward.
Lease renewal often leads to complications when the landlord implements changes that affect the tenant negatively. This could be an increase in rental payments, shorter term periods such as five-year terms to only two years and similar problems. Before the changes and various pitfalls are accepted, it is imperative that the tenant review the entire lease and contact a professional to assist with the matter. A real estate lawyer is generally the best contact to ensure no serious issues exist within the renewal lease. It is best to communicate the new lease terms with legal representation before signing.
When a renewal is possible, there is usually the option contained within the lease terms. The option terms may create a covenant between the tenant and landlord that permit the renewal of the lease with the names, prices, time and type of payment necessary to satisfy the terms. When everything has been met and actioned, the two are in agreement to renew the lease. Other clauses and changes may be within the document, and the parties are usually bound unless a breach occurs where the landlord or tenant may have the right to sue the other in this event.
Option Pitfalls Explained
One of the greatest issues that both landlords and tenants face when renewing leases is the increase in rent and how much it will be in the future, how much incremental changes show be put in the lease agreement and what options are available to both parties in these matters. If no agreement occurs, the option in renewing becomes void. This usually leads to the landlord keeping most of the same conditions when no adverse issues arose during the previous years excepting the rental amount. This may be determined through a mutual agreement, but this could create problems for tenant and landlord later.
The option is provided by the landlord to attempt to make good on a renewal. However, the pitfall of these actions is that the landlord may be seeking to increase the rent to a much greater amount through new tenants that have never had an agreement previously. By extending an option in bad faith, the tenant may have no choice but to leave and seek another property. If this is a commercial enterprise, it could affect business transactions and the company as a whole. Rental fees that increase exponentially may be the better option. However, the business owner may seek a new property in the interim with a shorter lease if possible.
Minor Stipulations Pitfalls
Maintenance, security deposits and other issues such as repairs may have been lacking in the previous years of the lease relationship. When renewing the lease, these amended issues may be changed through the clauses and conditions, but the landlord may still remain as neglectful as he or she was before. Usually, the only way to proceed with ensuring that the landlord does his or her job is to take him or her to court or threaten him or her with a lawyer. It is generally imperative to have a real estate lawyer available when renewing the lease to ensure these terms are placed within the document with other possible action available to the tenant.
Security deposits may be unavailable or used for other purposes by the landlord when they should be refunded or applied to the rent payment. At the end of the current lease, and at the time of renewal, the deposit should either rollover to the next lease term or have been refunded to the tenant. Repairs and regulatory maintenance is necessary before the lease renews in case the tenant moves out or acquires a new property. However, this could help the tenant if he or she does follow through with the renewal.
Real Estate Lawyers in Lease Renewals
When there are so many pitfalls that could affect the tenant other than the payment issues, it is important to hire a real estate lawyer to help in achieving the goals the tenant is wanting for the new lease period. Legal representation may assist in protecting the rights of the tenant, and he or she may change the lease document for the better.
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.