Lease Extension vs. Lease Renewal: What’s the Difference?
Everything seems to be going smoothly with your rental unit, but your lease agreement is about to end and you need to stay a little longer
What should you do? Well, there are two options: lease extension and lease renewal.
Now, you might be thinking, what’s the difference between those two options?
Although similar, they have quite distinct meanings and implications. So, it’s crucial to understand them to make the best decision for your circumstances.
So, What’s the Difference?
It can be easy to mix up lease extensions and renewals. So, before getting into an agreement with your landlord, the difference between the two should be clear to you.
What Is a Lease Extension?
Firstly, let’s look at what extending a rental agreement means. An extension means lengthening an existing rental period for a brief additional period, typically from a few days to a month or two.
This agreement allows the same existing terms and conditions to remain in place, except for the rental period duration. An extension is an excellent way to stay in your rental a little longer, but not commit to a whole new year-long contract.
If you need a little more time because your new place isn’t ready, this is your answer. An extension can just be 2 days or 7 weeks, really any duration that you and your landlord agree on.
It’s usually an addendum that you and your landlord sign to extend the terms of the initial lease, with payment terms indicated also.
What Is a Lease Renewal?
On the other hand, lease renewal means signing a new rental agreement after the original one expires. This agreement typically involves negotiating new terms and conditions or revising the existing ones to match market conditions (like average rent prices increasing) or reflecting any changes in the tenancy agreement (like if you’re getting a new roommate).
So, a renewal is redoing your rental agreement for a whole new year, and you’ll sign a new lease document.
What Are The Advantages of Each?
If you’re still confused about what you should do, understanding the advantages of each will help give you a clearer picture.
When You Should Choose a Lease Extension
One of the most significant advantages of a lease extension is that it can be done quickly and without too much effort. It requires less paperwork since it merely alters the original lease.
The negotiations are more straightforward, too, since the agreement is already in place, and both parties have a clear understanding of the terms.
When You Should Choose a Lease Renewal
If you plan on staying in your rental unit for the foreseeable future, then it’s just better to renew your lease. Plus, a renewal offers the opportunity to renegotiate any outdated terms and conditions.
What Should You Do Then?
There’s no correct answer because one option isn’t better than the other. At the end of the day, it depends on the circumstances you’re in.
What’s important is that you know the difference between the two options, so you know what you’re getting yourself into.
Are you interested in learning more about the ins and outs of renting? Check out our website for more tenant tips!