A provision commonly associated with a
commercial lease provision that
automatically ensures renewal of the lease
unless either the tenant or the landlord
notifies the other party of a desire to
terminate the agreement.
An automatic renewal clause should not
be confused with a renewal option. The
latter provides the right, but not the
obligation, to continue the lease on terms
and conditions as set out in that option.
Example of an Automatic Renewal Clause
Tenant Jones wants to ensure a continued
commercial tenancy and Landlord Smith is
interested in minimum involvement with the
property. The parties conclude that they
will essentially agree until they disagree
concerning the property. Consequently, an
automatic renewal clause is inserted in the
lease agreement. A typical wording follows:
The lessee, when
not in default hereunder, shall have the
right to an automatic renewal of the lease
for successive one year periods....
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