Bargain Renewal Option

Bargain Renewal Option

The right but not the obligation for a lessee to renew a lease at the end of its term for a periodic payment significantly below market rates. For example, if an apartment ordinarily rents for $1,000 per month, but a lessee may renew his/her rental agreement for $600 per month, he/she has a bargain renewal option. This effectively gives the lessee some of the rights associated with property.
References in periodicals archive ?
In addition, the restatement includes adjusting lease terms of certain leases to include bargain renewal option periods where exercise of the options would be reasonably assured, and recognizing the straight-line effect over the lease term of such changes in rents during the option periods.