A lease extension addendum is a legal document that extends an existing lease agreement between a landlord and a tenant, and it may modify terms like rent, security deposit, utilities, and other conditions. If the only alteration is to the termination date, all other original lease terms continue unchanged.
Unlike a Lease Renewal with a new lease termination date, a lease addendum adds to the current lease (with negotiable terms) and does not create a new lease agreement with different terms.
As a landlord, you may want to send an extension addendum to your tenants if you are willing to have them stay in your rental beyond the end date of the lease.
Alternative Form
If you want to change any terms of the original lease in addition to the contract end date, use our Lease Amendment instead.
Lease Extension Addendum vs. Lease Renewal Agreements
Lease extensions and renewals both enable continued leasing of a property by tenants and landlords. The choice depends on specific needs as they influence the lease differently.
- A lease extension is essentially a continuation of the existing lease, maintaining the same landlord-tenant relationship with potentially minor modifications for a set period. It doesn’t disrupt the original lease’s continuity.
- A lease renewal constitutes a new agreement after the original lease’s expiration. It might alter certain benefits that were maintained during an extension and could change liabilities for the original tenant if the lease was reassigned.
Additionally, lease extensions are usually for an additional few months, while lease renewals tend to be for another full lease term, such as one year.
What Happens If You Don't Extend a Lease?
Without a lease extension addendum, tenants who stay beyond the lease term become holdover tenants, transitioning the lease to a month-to-month arrangement. In this situation, landlords cannot renegotiate the rent amount, and tenants cannot renegotiate terms related to repairs or property conditions.
What Happens to the Original Lease?
By using an extension, the terms and conditions of the original lease remain the same.
Rental lease extension forms are common when landlords and tenants do not want to renegotiate new lease terms at lease expiration but instead want to extend the original tenancy for a short period.
When Should I Send the Extension?
Landlords typically send lease extension forms just before an original lease expires.
When Should You Use a Lease Extension Addendum?
There are a few reasons you should use a simple lease extension:
-
Create Goodwill:
- Extend goodwill to tenants by allowing them to stay beyond the original lease end, especially beneficial during inconvenient times like the holiday season.
- Helps tenants save on the cost and effort of finding a new place immediately.
-
Reduce Vacancy:
- Use lease extensions strategically to minimize vacancy periods while you search for a more suitable tenant.
- Useful if the current tenant has minor issues (e.g., occasional late payments or noise complaints), but you prefer to keep the unit occupied while looking for a replacement.
When Should You Not Use a Lease Extension?
Lease extension addendums are not always a good idea. You may not want to use a lease extension form if you:
- Have tenants who constantly breach your lease agreement. Bad tenants who consistently breach your lease agreement and are always late on rent should probably not receive a lease extension. Instead, let the lease expire and look for a more reliable tenant.
- Want to renovate: Since renovation can be challenging if your tenant is living in your property, you should let your lease terminate without extension if you have plans to renovate, thereby adding value to your unit.
After your tenant leaves, you can use the time between renters to renovate and attract higher-paying renters.
How Do You Extend a Lease Agreement?
To extend a lease agreement, take the following steps:
Step 1 – Initiate the Conversation Early
Start discussions with your tenant well before the current lease expires to allow ample time for both parties to consider their options and prepare for negotiations.
Step 2 – Look at the Original Lease
Look at the lease agreement you signed with your tenant and review it thoroughly.
Step 3 – Contact your Tenant
Call or email your tenants and propose a lease extension under existing or new terms (clauses, etc.). You should not modify the terms, only add to them.
Step 4 – Write and Send the Extension
If the tenant wants to extend the lease, discuss and determine the extension term (length of time). Then, write the agreement.
This extends the commencement of the old contract and adds a new lease closing date.
Once you finish writing your lease extension form, send a copy to your tenants for signatures.
Step 5 – Receive the Signed Lease Extension
The agreement is in effect after you and the tenant sign.
Sample Lease Extension Addendum
Below, you can find what a lease extension Addendum typically looks like:
How to Write a Lease Extension Form
Step 1 – Download Your Template
Download a free lease extension addendum template and open it in Word, Adobe PDF, or another word processor.
Step 2 – Fill in Landlord and Tenant Details
Fill in the blanks at the top of the agreement for the following:
- Date
- Landlord’s full legal name and address
- Tenant’s full legal name and address
Step 3 – Enter Dates and Property Address
- Enter the date of the original lease agreement and the expiration date.
- Write the property address (address, city, state, zip code).
Step 4 – Fill out the Lease Extension Section
Fill out the lease extension section.
A lease extension section should look something like this:
“The term of this Lease Agreement is now extended for three months, beginning on January 1, 2020, and ending on March 31, 2020 (the “Extension Term”).”
Frequently Asked Questions (FAQs)
What is the difference between a lease extension and a lease renewal?
A lease renewal involves creating a new rental contract after the original lease has expired.
In contrast, a lease extension continues the original lease contract, typically for a few months, and may or may not contain any revised or new terms.
Is a lease extension the same as a month-to-month tenancy?
No, short-term lease extensions are not the same as Month-to-Month Lease Agreements. Short-term lease extensions usually extend all terms of an original lease, whereas month-to-month lease agreements have newly negotiated terms.
How long can a tenant stay after the lease expires?
Once a lease expires, the tenancy becomes a “holdover” tenancy, and the tenant can continue to stay in the property as long as they continue to pay rent and the landlord allows it.
Holdover tenancies are usually treated like month-to-month contracts, and a 30-day notice to renew the lease or move out is the most common procedure in most states. Landlords can also include a clause in their rental agreement detailing the terms of holdover tenancies to prevent future conflicts.
Should the tenant initiate the lease extension?
No, waiting for the tenant to express interest might mean missing out on continuing the lease with someone who is interested but hasn’t spoken up.
While you shouldn’t impose a lease extension, being clear about your intent to extend and understanding the tenant’s desires is important. This approach helps ensure that both parties are on the same page, making securing signatures more straightforward.
