Real Estate Glossary

What is Extension Option?

Extension option is an agreement between the tenant and landlord that allows the tenant to extend their lease for an additional period of time after the original lease term expires. Extension options can be automatic or require negotiation. The terms of the extension, such as the length of the extension, the rent amount, and any other conditions will be agreed upon between the parties in advance. The extension option can provide the tenant with more flexibility and security, allowing them to remain in the property for a longer period without having to renegotiate the terms of the lease. This can also give the landlord more stability in terms of the cash flow and the certainty that they have a tenant in the property.