For business owners in Queensland, securing a commercial or retail lease with an option to renew can provide valuable stability and continuity. However, it’s crucial to understand that these options are not automatic and must be exercised correctly to be enforceable. As a Brisbane-based commercial and property law firm, Ensure Legal offers the following insights to help tenants navigate lease renewal options effectively.
Understanding Lease Renewal Options
An option to renew is a clause in a lease agreement that allows the tenant to extend the lease for an additional term under specified conditions. These clauses are not implied and must be explicitly written into the lease. If a lease lacks such a clause, the landlord is under no legal obligation to offer a renewal, and any new lease would be subject to fresh negotiation.
Key Considerations for Exercising Renewal Options
- Timely Action
Most leases require tenants to exercise their renewal option within a strict timeframe—usually between three to six months prior to lease expiry. Missing this deadline may forfeit your right to renew. - Proper Notice
The lease will typically specify how notice must be given—such as in writing, to a particular address, or via registered post. Failing to follow this process exactly may invalidate the renewal attempt. - Compliance with Lease Terms
Tenants must not be in breach of any lease terms at the time of exercising the option. Even minor non-compliance (e.g., late rent payments) can jeopardize the right to renew.
Special Provisions for Retail Leases (RSL Act)
Under the Retail Shop Leases Act 1994 (Qld), retail tenants benefit from additional protections:
- Disclosure Statement Requirement
Landlords must provide an updated disclosure statement within 7 days after a tenant exercises their renewal option. If they don’t, the tenant may withdraw the renewal within 14 days of receiving the statement. - Reminder Notice
Landlords are required to remind tenants at least 2 months before the latest date for exercising the option. However, the law imposes no penalty if they forget—so tenants should monitor deadlines independently.
Consequences of Getting It Wrong
Failing to properly exercise a lease renewal option can have serious consequences:
- Loss of your right to renew
- Forced vacating at the end of the term
- Being locked into a new lease at less favourable terms (or none at all)
Contact Us
If you’re preparing to exercise a renewal option or need help reviewing your lease agreement, contact Ensure Legal today. Our experienced team is ready to assist with tailored, practical legal solutions.
