Lease Extension
A lease extension agreement is a legal contract that allows a landlord and tenant to extend their lease beyond the original end date. This agreement can apply to both residential and commercial leases and typically maintains the same terms and conditions as the original lease, although certain terms may be modified if both parties agree.
What Is a Lease Extension Agreement?
Lease Extension Addendum
A lease extension addendum is a specific type of document that extends the term of an existing lease agreement. It establishes a new termination date while keeping the remaining terms of the original lease intact. Changes to the rent amount or other conditions may be included in the addendum.
Differences Between Lease Extension and Lease Renewal
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Lease Extension: This is a continuation of the original lease agreement, allowing the landlord-tenant relationship to persist beyond the expiration of the original lease term. It may include minor modifications but does not disrupt the continuity of the original lease.
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Lease Renewal: This constitutes a new lease agreement that begins after the original lease has expired. A renewal may alter certain benefits and liabilities compared to the original lease, potentially affecting the original tenant’s obligations.
Steps to Extend a Lease
Step 1: Review the Original Lease
Locate and review the original lease agreement to determine its end date and any clauses related to extension or renewal.
Step 2: Discuss Intentions
Contact the other party (landlord or tenant) to discuss the possibility of extending the lease under current or new terms.
Step 3: Send the Lease Extension Addendum
If both parties agree to extend the lease, the landlord or property manager will draft and send the lease extension addendum, which will be attached to the original lease agreement.
Step 4: Sign the Addendum
Both parties must sign and date the addendum for it to be enforceable. This can be done in person or through electronic means.
What to Include in a Lease Extension Addendum
A lease extension addendum should include the following elements:
- Name of the tenant
- Name of the landlord
- Property address
- Date of the addendum
- Effective date of the lease extension
- End date of the lease extension
- Disclosure of consequences for breaking the lease extension
- Rent amount during the lease extension
- Additional deposit (if applicable)
- Property care responsibilities during the lease extension period
- Signatures and dates for both the tenant and landlord
Consequences of Not Using a Lease Extension Addendum
If a tenant remains in the rental unit after the lease expires without a lease extension, they become a holdover tenant. In this case, the lease converts to a month-to-month tenancy, during which landlords cannot renegotiate rent amounts, and tenants cannot renegotiate terms related to repairs or property conditions.
When to Use a Lease Extension Addendum
A lease extension addendum is appropriate in the following situations:
- When the tenant has adhered to the original lease terms and the landlord wishes to retain them.
- When the tenant needs additional time to find a new property without committing to a full lease term.
- When the landlord wants to minimize vacancy periods while searching for a new tenant.
When Not to Use a Lease Extension Addendum
A lease extension may not be advisable if:
- The tenant has consistently breached the lease agreement.
- The landlord plans to renovate the property, which may be challenging with a tenant in residence.
FAQs
A lease extension addendum is a legal document that extends an existing lease agreement between a landlord and a tenant. It establishes a new termination date while keeping the original lease terms intact, unless specific changes, such as rent adjustments, are agreed upon.
To extend your lease, first review the original lease to understand its terms and expiration date. Then, communicate with the other party to discuss intentions for extension, send the lease extension addendum for signatures, and ensure both parties retain a signed copy for their records.
A lease extension is a continuation of the original lease agreement, maintaining the same terms with possible minor modifications, while a lease renewal creates a new lease agreement after the original lease has expired. Extensions keep the original lease intact, whereas renewals may alter certain benefits and liabilities.
A lease extension addendum should include the names of the landlord and tenant, property address, the effective date of the extension, new end date, rent amount during the extension, and signatures of both parties. It may also outline consequences for breaking the lease extension.
Consider using a lease extension if you have a reliable tenant who pays rent on time and maintains the property well, especially during unfavorable rental market conditions. It is also beneficial if you are not planning any renovations and want to minimize vacancy periods.
If a lease is not extended and the tenant remains in the property, they become a holdover tenant, transitioning to a month-to-month tenancy. In this situation, landlords cannot renegotiate rent, and tenants cannot negotiate terms related to repairs or property conditions.
To write a lease extension agreement, include the names of both parties, property address, original lease expiration date, and the new extension dates. Specify any changes to terms like rent or security deposits, and ensure both parties sign the document for it to be valid.
Yes, the rent amount can be changed in a lease extension addendum, especially if the extension is for a short period. Both parties must agree to the new rent amount, which will be documented in the addendum.