Q&As

A tenant exercised an option to renew which required the landlord to grant a new lease on expiry ten years ago. However, the renewal has not yet taken place. Is it possible for the tenant to withdraw its option notice or can the landlord enforce and require the tenant to take a new lease?

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Published by a LexisNexis Property Disputes expert
Published on: 23 December 2019
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For the purposes of this Q&A, we have assumed that the tenant exercised an option to renew requiring the landlord to grant a new lease on expiry of the lease.

Options to renew generally

A contractual option to take a lease for a further term is a ‘call’ option. It confers a unilateral right on the tenant to call for a renewal lease (often subject to Conditions precedent such as all rents being paid up to date and the tenant not being in material breach of covenant). There is no obligation on the tenant to exercise their right, but if they do, the landlord is bound to perform their part of the bargain.

A call option is a contract for the sale of land within section 2 of the

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United Kingdom
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Key definition:
Conditions precedent definition
What does Conditions precedent mean?

In leveraged finance transactions, conditions precedent are commonly split into conditions precedent to signing and conditions precedent to closing. Conditions precedent to signing are conditions that must be satisfied by the borrower before the facility agreement can take effect. Conditions precedent to closing are conditions which must be satisfied by the borrower before it is entitled to draw down funds under the facilities agreement.

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