A commercial lease extension addendum is a legal document that extends the lease period of an existing lease agreement for a commercial property. This addendum ensures that both landlords and tenants agree on the extension details, such as the extension period and rent amount, without altering the original lease.
When to Use
- Continuing Success: If your business thrives at its current location and you wish to maintain stability without disruption.
- Near Lease Expiration: When the original lease term is about to expire, and both parties are interested in extending the agreement.
- Additions: If there are minor additions in leasing conditions, such as adjustments in rent, or lease duration, that need formal documentation.
Tips for Drafting a Commercial Lease Extension Addendum
Here are some refined tips to ensure the addendum covers all necessary aspects:
- Review the Original Lease Agreement: Carefully analyze the existing lease to understand its structure and terms thoroughly. Focus specifically on clauses that influence business operations such as use restrictions, sublease conditions, and termination rights, to ensure compatibility with the extension.
- Define the Extension Terms: Clearly specify the start and end dates of the lease extension. These dates should be distinctly stated to prevent any misunderstandings or disputes in the future.
- Document Rent Adjustments: Include any adjustments in rent for the extension period. Clearly state the new rent amount, payment methods, and due dates. Add escalation clauses that outline how the rent will increase, often based on a fixed percentage or linked to an economic index.
- Verify Signatory Authority and Documentation Requirements: Ensure that individuals signing the addendum are authorized to legally bind the parties. Detail any required documentation that must accompany the addendum, such as corporate resolutions or updated evidence of insurance.
- Include Dispute Resolution Mechanisms: Integrate terms that define how disputes related to the lease extension will be handled. Options such as mediation, arbitration, or litigation should be chosen based on the nature of the commercial relationship and customary industry practices.
Commercial Lease Extension Addendum Sample
Download the template in PDF or MS Word below.
