Options to extend agreements, usually in 5 year increments, are usually like this:
“If there is not, at the time the caretaker gives notice under this clause nor at xxx date, an outstanding breach of this Agreement by the caretaker entitling the body corporate to terminate it, the caretaker May by giving written notice to the body corporate at any time before xxx date, extend or renew this agreement or the term of it for the period of 5 years commencing on xxx date and ending on yyy date….”
This term states basically that before X date, the caretaker can exercise the option to extend or renew the agreement for whatever the period agreed was. A straight extend is the simplest path to take.
Here is another variation of this:
“If there is not, at the time the caretaker gives notice under this clause nor at xxx date, an outstanding breach of this Agreement by the caretaker entitling the body corporate to terminate it, the caretaker May by giving written notice to the body corporate at any time before xxx date, renew this agreement or the term of it for the period of 5 years commencing on xxx date and ending on yyy date…”
Notice that in this clause, there is no extend and only the word renew is utilized. Here, the investor, in this option to renew the agreement is now in a grey area where they want to extend the terms of the agreement obviously but only has the option to renew it. Renewing an agreement means to involve the committee into drafting any new terms and conditions into the agreement which may include altering terms of service, altering performance guidelines and day to day, weekly and monthly tasks. The new caretaking agreement also must be voted on not just by the committee but by all the owners of the complex, with at least 25% of owners represented in the vote otherwise the vote will be nullified. This puts the investor in a tricky situation and slightly at the mercy of the committee.
If you’re coinciding selling at that time, you’re basically forced to pay for: the buyer’s lawyers fees to review the new agreement, the committee’s lawyers fees in renewing and drafting the agreement and your own lawyers fees. This makes the process really expensive and stressful. In general, highly recommend to inspect the deed of variation for options exercise terms and lookout for ambiguous wordings like renew and review. Just the word extend is probably your best bet.
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