If you’re happy with your current lease, you may opt for a lease extension. This means you extend the terms of the current lease agreement, although the additional time frame is typically shorter than the original time frame. For example, let’s say you’re renting an apartment and your current lease is set to expire in the coming months. If you’re happy with the apartment and your monthly rent, you may want to extend the rental agreement for a little while longer. If you do extend the lease, the other terms of your original rental agreement will typically stay the same. However, the new, extended portion of the timeline may be shorter than your original least term. For example, your original lease may have been for a year, but a lease extension may be for four months.
How a Lease Extension Works
A lease extension occurs when a lessee and a lessor extend the terms of a current lease agreement. It’s a good option when both parties are happy with the current terms of the lease. There are many reasons you may want to opt for a lease extension, whether you are a lessor or a lessee. Extending your current lease as a lessee means you can put off searching for a new apartment to rent or a new vehicle to lease, both of which can be time-consuming and entail extra costs. Lease extensions for apartments can be helpful if you need a little more time before relocating. For example, let’s say you found a new apartment, but it won’t be move-in ready for another six months. Extending the terms of your current lease gives you more time to prepare for the move. If you’re not happy with the terms of your current lease, you may opt for a lease renewal instead. With a lease renewal, you sign a new lease for the same asset, with similar but different terms than the original agreement. But the new terms, such as a different payment amount, could vary.
Pros and Cons of a Lease Extension
Signing a lease extension has both advantages and disadvantages to consider.
Pros Explained
Shorter process: Lease extensions are usually faster to complete than the original lease since you’re not renegotiating the terms of the lease.Cost savings: It’s usually less expensive to extend the terms of your current lease since your rent won’t increase. And you don’t have to spend the time and money to look for a new place to live.Consistency: If you’re happy with the terms of your current lease, a lease extension helps maintain them.Flexibility: If you plan to move but need a little more time, a lease extension can provide more flexibility while you search for a new place.
Cons Explained
Shorter time period: Lease extensions are meant to be temporary agreements, so they are typically shorter in length than the original lease. Therefore, they don’t provide the security you may want in a lease agreement.Same terms: If you’re unhappy with the terms of your current lease, such as the amount of payment, extending a lease does not change them.
