Commercial lease rent review question.

[silene101]

Hi folks,

I have a commercial office lease which is coming up for 'Option for Renew' on the 28th August.

The tenants wish to renew for a further 5 years, which is fine by me.

However,the annual rent review date has been 1st March each year.

So... when I renew the lease in August, that date also becomes the annual rent review date which means I miss out on reviewing the rent next March.

What would others do in this situation; a) Forgo a rent increase till the following August 2008 out of goodwill or b) Put something in the lease stating an increase will be applied in March and then every August after that or c) Can't think of a c).

Any suggestions?

Silene101

 

[Dazz]

What would others do in this situation

Your actions shall be dictated by what is stated specifically in the Lease document.

You have no room or ability to implement suggestions.

The option take up is purely for the benefit of the Lessee. As the Lessor you have no say in it.

I do find it strange however to not co-incide the take up of the option period with a simultaneous market rent review. Most Leases have this in place.

However, you must go back to the explicit and detailed wording of the Lease. You are not at liberty to just make it up as you go along, however generous to the tenant you "feel". I'd say both options a) and definitely b) are out of the question. The Lessee, if they are smart, would never agree to change the Lease wording.

If you are unsure about your rights and obligations as conferred by the exact wording of the Lease, I'd be seeing someone who knows about this stuff backwards. Another 5 years is a long road to haul if for any reason you stuff it up.