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How to renew commercial lease

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  • How to renew commercial lease

    The lease is due on 1st of May this year. According to the contract, tenant has the rights of 2 renewal of 2 years. I have emailed the tenant about lease renew, the tenant emailed back saying they would like to continue the lease. My question is what needs to be done to renew the lease? Can we use the original contract? Also the tenant has a bank guarantee certificate of 5,000 dollars that's is expired on 1st of May too. Could I negotiate with the tenant to extend the bank guarantee certificate for another two years? Thank you

  • #2
    If they have served notice, which is their email reply saying that we would like to 'renew for 2 years in accordance with the lease' - then that's all you need. The original terms of the contract will flow on for next two years. Your tenant will need to renew their bank guarantee, and that should be stipulated that while they are in occupation of the property, they must have an up to date bank guarantee. It would be a good idea to have the renewal documented properly, and any lawyers should be able to prepare a Deed of Renewal for $500 - if its just a simple renewal. Also, is there a rent review on renewal? Just check on things like that too.

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    • #3
      Thank you for the message. I have just received tenants reply. He wants to get rid of the banker certificate as he said it's the money he can't spend and it costs him 250 a year. He said we are the only landlords who requested it. He asked to invoice us the renewal fee or have other arrangements. I would like to ask if banker certificate is common in commercial property? There is no bond at all to protect landlord? What if tenant doesn't pay rent...is there other arrangements we can have to make sure tenants are paying for the fees? Thank you.

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      • #4
        It's either a banker's certificate or a personal guarantee in my experience. The certificate is probably safer but the personal guarantee seems more common.

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        • #5
          It's actually pretty typical to request a bank guarantee, however as Scouser has said - personal guarantee works too (but is much longer and costly to enforce.)

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