To preserve your retail lease option, you usually need to give a clear written notice in the exact way and within the exact window stated in your lease. The deadline is often months before the lease ends. Waiting for the landlord to remind you can cost you the option.
If the new rent will be current market rent, NSW law can let you request an early rent determination before you decide. That request has its own statutory window, so you may need to act six months before the option deadline.
This article assumes the Act applies. If that isn’t clear, first check whether your NSW lease is a retail lease.
Where do you find the real option deadline?
Start with the executed lease, every deed of variation and any assignment documents. The option clause should state the further term and when notice must be given. The notices clause usually tells you who must receive it, where it must go, which delivery methods are valid and when service is treated as complete.
Cross-check the lessor’s disclosure statement, but don’t use it instead of the signed lease. Confirm the legal names of the tenant and landlord, not only their business or shopping-centre names.
For example, a lease ending on 30 June may require exercise by 31 March. A notice on 30 June would then be late even though the current term hasn’t yet expired.
Does the landlord have to remind you?
No general rule in the Retail Leases Act 1994 requires a landlord to remind a tenant about an option deadline. The Act has a separate end-of-term notice regime for some retail leases without an option, but section 44 expressly excludes a lease containing an option.
That distinction matters. You shouldn’t assume the lease will be extended because the landlord stayed silent.
What makes an option notice effective?
Your notice should state clearly and unconditionally that the tenant exercises the identified option for the identified premises and term. It should be signed or authorised by the correct tenant entity and served using a method the lease permits.
Before sending it, check:
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the opening and closing dates of the option window;
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the required recipient, address and delivery method;
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deemed-service rules, weekends and public holidays;
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whether the lease requires the tenant not to be in breach when the option is exercised or when the renewed term begins; and
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whether an assignment or change in business structure altered the tenant’s legal identity.
Serve early enough to avoid an argument about receipt. Keep the signed notice, sent email or courier record, delivery confirmation and the calculation of deemed receipt. Asking for written acknowledgment is a useful protective step, but it isn’t a substitute for valid service.
Can you find out the market rent before committing?
If the option renews the lease at current market rent, section 32 of the Act can give you an early determination process. You request it by written notice to the landlord during the period beginning six months and ending three months before the last day for exercising the option.
For a lease term of 12 months or less, the window instead begins three months and ends 30 days before the option deadline. You can’t use the process if the parties have already agreed the actual market rent.
Once the requested rent is determined and notified to you in writing, you have 21 days after that notification to exercise the option. If notice arrives within 21 days before the lease expires, the Act extends the lease as needed to preserve that decision period. This extension comes from a valid early-rent request; it isn’t a general cure for a missed option.
How is current market rent decided?
You and the landlord can agree the rent. If you cannot, a specialist retail valuer can determine it under the Act. The valuer considers the lease and comparable rent for a vacant shop offered for the same or a substantially similar use. The comparison is made on an effective-rent basis, which means incentives and concessions form part of the picture rather than advertised rent alone.
The valuation excludes the value of goodwill you created and your fixtures and fittings. Concessions and benefits commonly offered to prospective tenants are relevant. Under the early-determination procedure, the parties generally share the valuer’s cost equally.
A right to challenge the valuation can be lost if the review deadline passes. If the amount will decide whether the location remains viable, obtain advice when the early-determination window opens, not after the option deadline.
Must you fix a breach before exercising?
Many options are conditional on the tenant having complied with the lease. The exact language matters: some clauses focus on an existing breach when notice is given; others refer to unremedied breaches or compliance when the new term begins.
Review rent and outgoings, insurance certificates, repair obligations, permitted use and any outstanding notices. Don’t assume every minor historical breach defeats every option, but don’t leave a known default unresolved while the deadline approaches.
What documents follow a valid exercise?
The notice exercises the option if the lease’s requirements are met. The parties will usually then document the renewed term, complete any required disclosure updates, confirm rent and security arrangements, and register the renewed lease where required.
Those follow-up steps are important, but negotiations about the paperwork shouldn’t obscure the first task: serve the option notice on time. If you meet the lease requirements, the notice itself exercises the option. You don’t usually need the landlord to accept it unless the lease says otherwise.
What happens if you miss the option deadline?
You will ordinarily lose the contractual right to the further term. The landlord may negotiate a new lease on different rent and conditions, offer the premises elsewhere, or require you to leave and complete your make-good obligations when the fixed term ends.
A holdover is not the same as renewal. It may leave you occupying month to month under the lease and vulnerable to termination on relatively short notice. That uncertainty can affect staff, fit-out investment, finance, a franchise arrangement or a proposed business sale.
If you think the notice was late or defective, get urgent advice before conceding the option is lost. The correct deadline, service method and the parties’ conduct are fact-specific. In some cases, the landlord’s words or conduct may also affect whether it can insist that the notice was late or defective. Continuing to pay rent or negotiating informally doesn’t itself revive an expired option.
Is your option window open?
Biz Lawyers & Advisory can review your lease, calculate the deadlines, prepare the option notice and advise on the market-rent process and renewal documents.
Call 1800 893 836 or contact us online.
This article is general information, not legal advice. Lease wording, statutory coverage, service requirements and the facts can change the result.
Primary sources
Law and guidance checked 13 August 2026.
