Commercial leasing

Lease renewal & option exercise.

An option to renew is only worth what it says, and only if you exercise it correctly and on time. CMK Legal advises Melbourne tenants and landlords on exercising options, negotiating renewals and resetting rent, so a valuable tenancy is not lost to a missed date or a poorly handled market review.

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Solicitor-reviewed

Option notices drafted and served by a solicitor.

Fast turnaround

Advice in days, well inside your option window.

Fixed fee, quoted first

Fixed fee for option exercise and renewal advice.

Victorian leasing law

Retail Leases Act notice rules applied correctly.

How options and renewals work.

An option is a contractual right to a further term, usually exercisable in a defined window before expiry, by written notice, and only if the tenant is not in breach. Miss the window and the right can be gone, leaving you holding over on monthly terms with no security.

For retail leases in Victoria, the landlord must notify the tenant of the option date and of the rent for the further term within a statutory period before the last date to exercise. If they do not, the last date to exercise is pushed out, a protection tenants frequently do not realise they have.

Where there is no option, renewal is a fresh negotiation. That is an opportunity to reset rent, extend the term, secure an incentive for re-fit and clean up clauses that have caused friction over the last five years.

Diary your option window the day you sign the lease, and speak to us three to six months before expiry. Preparation is what converts a renewal into a better deal rather than a rollover.

Why renewal is the moment that matters.

The option must be exercised exactly as drafted

Method of service, address for notices, timing and form all matter. Landlords do dispute defective notices, particularly where the market rent has moved in their favour.

The rent for the further term can be challenged

Where the further term rent is set by market review, the landlord's figure is a proposal, not a determination. Retail leases include a valuation process, and we make sure it is used properly.

Renewal is the chance to fix the lease

Outgoings definitions, repair obligations, make-good and assignment rights can all be renegotiated at renewal, when the landlord wants continuity of income.

Goodwill and fit-out investment are protected

Your location, customer base and fit-out are often the most valuable assets in the business. Securing the next term protects them and preserves the value of the business if you sell.

Come to us about renewal when.

  • Your lease expires within twelve months
  • You have received a landlord notice about an option
  • You are unsure whether you still have an option left
  • The market rent proposed looks too high
  • You are holding over with no documented term
  • You want a longer term to support a business sale
  • The premises need re-fit and you want an incentive
  • You are a landlord preparing a renewal offer

If the option window has passed, all is not lost, for retail leases the statutory notice rules may have extended it, and in practice most landlords prefer a good sitting tenant to an empty shop. We assess the position before you approach them.

How we handle a renewal.

  1. 01

    Read the lease and check the dates

    We confirm the option window, notice requirements, breach conditions and how the further term rent is set.

  2. 02

    Position assessment

    Your leverage, market conditions and any statutory extensions are assessed before contact with the landlord.

  3. 03

    Notice or offer prepared

    A compliant option notice is drafted and served, or a renewal proposal is put to the landlord.

  4. 04

    Rent settled

    The further term rent is negotiated, or the market review and valuation process is run properly.

  5. 05

    Terms improved

    Outgoings, repair, make-good and assignment clauses are renegotiated as part of the renewal.

  6. 06

    Documented and executed

    The further term or new lease is documented, signed, guaranteed and registered if required.

Fees for renewals and options.

Checking your option, drafting and serving the notice is a fixed fee. Negotiating a renewal, a market rent review or an entirely new lease is quoted separately once we know what is being reopened.

Request a fixed-fee quote

FAQs

Renewal and option FAQs.

Still unsure? Call us on (03) 9008 7224 and speak to a lawyer, not a call centre.

What happens if I miss the option window?
Strictly, the option lapses and the lease ends at expiry. For retail leases the landlord's obligation to notify you of the option date can extend the last date to exercise, and in practice many landlords will still deal. But you lose the certainty, and often the pricing.
How do I exercise an option properly?
By written notice, within the window, served in the manner the lease requires, and while not in breach. We draft and serve the notice and keep proof of service, because that is what a dispute turns on.
Can the landlord refuse to renew if I have been late with rent?
Many leases make the option conditional on the tenant not having persistently breached. Isolated late payments that were remedied are usually not enough, but a history of default gives the landlord an argument. We assess this before serving notice.
How is the rent for the further term set?
It depends on the lease, a fixed percentage increase, CPI, or a market review. Retail leases give the tenant the right to have a market rent determined by a specialist retail valuer if the parties cannot agree.
I am holding over. What are my rights?
Holding over is usually a monthly tenancy terminable on short notice, which is a weak position if you have fit-out invested. It is worth documenting a further term even a short one.
Do retail tenants get a minimum five-year term?
The Retail Leases Act provides a minimum five-year term, including option periods, unless a certificate from the Small Business Commission is obtained. We check whether your arrangement complies.

Related services.

Lease negotiation

We negotiate rent, incentives, options and repair clauses with the other side.

Learn more

Retail Leases Act advice

Whether the Act applies to your premises, and what it changes for both sides.

Learn more

Lease assignment & transfer

Transferring a lease when a business is bought or sold, with consent handled properly.

Learn more

Secure your next term.

Start online or book a consultation with a CMK Legal commercial leasing solicitor in Richmond, Melbourne.

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