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Home Resources Real Estate Lease Renewal vs. Extension: What’s the Difference?

Lease Renewal vs. Extension: What’s the Difference?

Landlords must know the difference between a lease renewal and a lease extension. LegalTemplates.net explains how to use each document properly.

Jana Freer

Updated October 28, 2022 | Written by Jana Freer
Reviewed by Susan Chai, Esq.

Many landlords of residential properties ask, “What is the difference between a Lease Renewal and a Lease Extension?” 

Both lease renewals and lease extensions have the same effect of continuing a rental contract but they are different and understanding the difference is vital to any landlord who might want to continue leasing to tenants after their original leases expire.

If you are a landlord wondering how to renew or extend lease agreements when a lease expiration date is approaching, read on to learn how by using standard real estate documents.

While a lease renewal creates a new agreement for a new term period, a lease extension extends the term of an existing lease.

Table of Contents
  • What is a Lease Renewal?
  • What is a Lease Extension?
  • Summary and How to Create Your Form

What is a Lease Renewal?

A lease renewal creates a new lease agreement based on an existing lease agreement due to expire. It often keeps all of the existing lease terms; the only change is an updated rental period.

But, sometimes, a lease renewal will modify some terms or clauses from the original lease.

Other ways to refer to a lease renewal agreement include:

  • Residential Lease Renewal Agreement
  • Lease Renewal Form
  • Lease Renewal Letter
  • Lease Renewal Offer

TIP

If a landlord and tenant have a good relationship and are happy with the original lease, they can renew and keep the contract the same aside from the new one’s beginning and end dates. They can also make changes if they are generally happy but want to modify a few lease clauses or terms.

If landlords want to increase rent prices for renewed leases, they may send a Notice of Rent Increase and then clearly state the new increased rent on the lease renewal form.

When Should a Landlord Use a Lease Renewal Form?

Landlords should use a lease renewal form when they want to:

  • Continue a residential tenancy under the same conditions for a new lease period
  • Keep the same tenant for another year (or a different lease term) and increase the rent amount
  • Update the terms of the rental agreement

These situations and others make a lease renewal useful for a landlord.

A Landlord Can Refuse to Renew a Lease

A landlord does not have to renew a lease. Landlords can refuse to renew a lease at the end of a lease if:

  • A tenant consistently fails to pay the rent or pays late
  • The tenants cause property damage or violate the lease policy
  • A landlord plans to sell the property
  • The landlord wants to move into the home
  • The property owner has other legal reasons to do so (check with your state)

It is illegal to refuse to renew a lease for discriminatory or retaliatory reasons (due to tenants exercising their rights).

Make sure you know your state’s laws to avoid potential issues.

What is a Lease Extension?

A lease extension agreement continues or extends the existing lease for a set period rather than creating a new contract. Landlords usually extend leases for a short term, for example, three months.

A property owner might agree to a lease extension to give tenants a little more time in the rental unit as they look for a new apartment, particularly if tenants are moving to a new city and need to coordinate travel.

Often, a landlord extends a lease for a period of time to benefit from keeping the property occupied for a bit longer, such as in a slow rental period like during the holiday season.

Important

Lease extensions typically provide the landlord and tenant short-term flexibility rather than obligating either to a new lease over a lengthy time frame.

The original agreement usually stays the same in a lease extension, but a landlord can modify specific terms and clauses, such as changing the rent amount. Of course, the tenant must agree to any new terms and both parties have to sign the lease extension to signify their acceptance.

When Should a Landlord Use a Lease Extension Form?

Landlords should use a lease extension when they prefer to extend the current lease agreement for a short time rather than renew it for a long-term lease.

Lease extension forms are helpful when:

  • The tenant wants a short time to find a new place to live and you agree
  • You want to find a new tenant but want to keep your property occupied for now
  • You want more time to decide whether to renovate or sell the property

Summary and How to Create Your Form

Key takeaways: There are pros and cons to using lease renewal agreements and lease extensions.

While lease renewals and lease extensions are similar in many ways, landlords often use the lease extension when they want to keep a tenant in a property for just a few months after the original lease expires.

Lease renewal agreements help landlords secure tenants for another full rental term, even when a rent increase becomes part of the new lease. You do not have to create your lease renewal and lease extension agreements from scratch.

Instead, you can easily make and edit these essential documents with our form builders.  Using our step-by-step builder, you will see how simple it is to organize the information and produce the documents that best help you run your real estate business. 

Many landlords also save money using our customizable attorney-drafted forms that help minimize financial mistakes.

Jana Freer

Jana Freer

Real Estate Editor

Jana Freer is a Real Estate Editor with Legal Templates, where she creates and edits legal form descriptions and articles to help landlords and tenants better understand real estate processes. She...

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In This Article

  • What is a Lease Renewal?
  • What is a Lease Extension?
  • Summary and How to Create Your Form
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