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 on LexisPSL on 23/12/2019

The following Property Disputes Q&A provides comprehensive and up to date legal information covering:

  • 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?
  • Options to renew generally
  • Withdrawal of option notice
  • Enforcing completion

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?

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 Law of Property (Miscellaneous Provisions) Act 1989 (LP(MP)A 1989). It must:

  1. be in writing

  2. contain or incorporate all of the terms expressly agreed between the parties, and

  3. be signed by or on behalf of each party

The tenant’s notice of exercise is simply a mechanism to

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