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I am often asked by landlords and tenants whether a new lease should be signed when a tenant exercises an option to renew a lease. 

 

 

A lease for a term up to 3 years (including any option period) does not have to be registered. So, if a tenant exercises an option for a term that does not exceed 3 years  (including any further option period) there is an enforceable lease between the parties, whether or not the lease is registered. The lease is binding on a new owner of the premises if the landlord sells the premises.  However, there is nothing to stop the parties from registering the lease if they want it to be recorded on the title to the land.

 

 

If a tenant exercises an option for a term that does exceed 3 years (including any further option period), the lease must be registered, otherwise it is only a lease from month to month. However, the exercise of the option creates an Agreement to Lease that the parties can enforce.

 

If the tenant breaches the terms of the lease from month to month, the landlord can terminate the tenancy by giving one month notice, but the Supreme Court has the discretion to make an order that the parties sign and register a new lease. This is called an order for  "specific performance". The Supreme Court is unlikely to make an order if the tenant has been regularly late in paying the rent, or has breached the lease in other significant ways. In most cases a tenant will only apply for an order where the landlord has terminated the lease, but by then it may be too late.  

 

Also, if the lease is not registered the tenant is not protected if the landlord sells the premises.

 

 

There was resistance to registering leases when lease duty was payable. Since lease duty has been abolished, a new lease can be prepared and registered relatively cheaply. There is no need for a lengthy lease that requires the tenant or their lawyer to take time, and incur significant costs, to read. It is possible to prepare a "two page" lease which sets out the amended items in the schedule and incorporates the terms of the previous lease. This can be done at a minimum cost. For some reason, many lawyers resist this simple procedure and create unnecessary costs for the parties. If the lease is done in this simple form, the tenant doesn't really need to use a lawyer.