Automatic Extension of Term Clause
(Commercial Lease) (Pro-Landlord)

Summary

This automatic extension of term clause may be included in a commercial lease to provide that the term of the lease will automatically be extended unless the tenant notifies the landlord that it does not wish to extend the term. This template includes practical guidance, drafting notes and optional clauses. This clause favors the landlord, but includes an optional, tenant-friendly provision with drafting guidance. Though the terms extension and renewal are often used interchangeably, it is important to understand the difference between the two. An extension is a continuation of an existing tenancy on all the same lease terms while a renewal involves the creation of a new tenancy, separate and distinct from the initial tenancy. For guidance on the practical implications of this distinction, see 2 Powell on Real Property § 16B.05 [4]. This automatic extension of term clause may be included in a commercial lease to provide that the term of the lease will automatically be extended unless the tenant notifies the landlord that it does not wish to extend the term. This template includes practical guidance, drafting notes and optional clauses. For additional guidance on commercial leases, see Office Leasing Resource Kit and Restaurant Leasing Resource Kit. For a full listing of key content covering retail leasing, see Retail Leasing Resource Kit. For information on industrial leasing, see Industrial Leasing Resource Kit.