15 Sneaky Renewal Clauses Tenants Overlook (Until It's Too Late)
Renewing a commercial lease sounds simple until you're knee-deep in fine print. Whether you're in office, industrial, or retail space, renewal clauses can be full of traps that favour the landlord unless you know what to watch for. Here are 15 of the most misunderstood, misread, or just plain missed renewal terms that can quietly cost tenants serious money, flexibility, or both.
1. Holdover Rent
Staying past your lease expiry without renewing? You’ll likely pay 150 to 200% of your current rent, sometimes with daily penalties tacked on. No, you can’t “just hang out a bit longer.”
2. Market Rent vs. Fair Market Rent (FMR)
Market Rent = what your landlord wants.
Fair Market Rent = what the space should lease for in a competitive market.
But here’s the catch: many leases let the landlord define FMR, and tenants assume it’s neutral. Is it?
3. Option to Renew vs. Right to Renew
An Option to Renew gives the tenant the choice to extend, if conditions are met.
A Right to Renew can bind the landlord to specific renewal terms.
Don’t assume your option equals a guarantee.
4. Renewal Rent Escalations
Some leases lock in a rate. Others default to “Fair Market Rent” or CPI increases. When the “greater of” clause is added in there that means, whichever number benefits the landlord more. Always read the escalation language.
5. Ratchet Clauses
These little gems say rent can’t go down, even if the market does. So yes, you could be paying above-market rent in a downturn with no relief in sight.
6. Early Notification Deadlines
Miss your 6 - 12 month renewal notice window? You could lose your renewal option entirely, be locked into the landlord's terms or be forced to renegotiate from scratch, often at higher rates.
7. Renewal Conditions (a.k.a. The Clean Record Clause)
Many renewal options are only valid if you're in full compliance: no late rent, no unauthorized sublets, no minor breaches. Even one misstep can void your renewal rights. How that clause is written can make or break your renewal options.
8. ROFR vs. ROFO
Right of First Refusal (ROFR): You can match another offer.
Right of First Offer (ROFO): You get first dibs, but no guarantees.
They sound similar. They're not. And ROFR is usually better for tenants.
9. Relocation Rights
Some leases let landlords relocate you, even after you renew. That “new term” could land you in a less desirable space or building. How does that relocation happen? Who pays for what? Don’t assume stability unless it’s spelled out.
10. TI Allowance Reset (Or Lack of One)
Renewal ≠ renovation budget.
Unless negotiated, many landlords offer zero dollars for improvements, maybe a carpet shampoo if you're lucky.
11. Operating Expenses: The Silent Reset
If your lease doesn’t say otherwise, landlords can restructure op-ex calculations during the renewal. Suddenly, you’re paying for new HVAC systems or mystery “admin” fees.
12. Missing Renewal Caps
You can cap your rent increases (e.g. 5% annually) if you don’t ask - you don’t get, and the landlord certainly won’t offer it.
13. Parking & Signage Ambiguities
Those parking spots or signage rights you had? They don’t always carry over. Check your renewal terms or risk losing them, or paying extra to keep them.
14. Subleasing & Assignment Restrictions
Just because you had the right to sublease in the original lease doesn’t mean you still do in the renewal term. Many landlords sneak in stricter rules. Always confirm.
15. Restoration Obligations
Even if you renew, some leases require you to return the space to original condition when you eventually vacate. That means tearing out improvements you paid for, unless you negotiate otherwise.
Final Thoughts:
Lease renewals aren’t simple—and they’re rarely tenant-friendly out of the box. Start early, know your terms, and never assume what applied in the original lease will automatically carry into the next.
📅 Start renewal discussions at least 12 months before expiry
📌 Negotiate everything from rent to rights, signage to subleasing
🧐 Read the fine print. Or better yet, have someone who reads it for a living do it for you
📩 Have a lease up for renewal? Let’s break it down before it breaks your budget.
Susan Williamson
Commercial Realtor – Williamson Commercial Realty
I don’t do cookie-cutter. I do what works, for you.
Built for business. Backed by data. Negotiated with bite.
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