Glossary
Legal & Compliance
Renewal Option
A contractual right to extend the lease term. Exercising it can reset the base year or the CAM definition, depending on the exact renewal language.
Firm impact
Time the final audit of the expiring term before a client commits to renewal. An unresolved overcharge in the last base year can become permanent once the renewal locks in a new baseline.
How this gets abused
A client exercises a renewal option without auditing the final year of the expiring term. The renewal resets the base year to that still-inflated final year, baking the unresolved overcharge into rent for the entire new term.
Practitioner note
Calendar the renewal decision deadline against the outstanding audit window for the expiring lease year. Complete the audit before the client commits to the renewal.
Related terms
FAQ
Questions about renewal option
Should a client audit CAM charges before exercising a renewal option?
Yes. If the renewal resets the base year, any unresolved overcharge in the final year of the current term can carry forward into every year of the new term.
Does every renewal option reset the base year?
No, it depends on the exact lease language. Some renewals keep the existing base year. Read the renewal clause closely before assuming either outcome.
You know the term. Now check the math.
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