Exercising an option that was granted in a lease with no change in terms should be a fairly simple exercise as specifically defined in the lease – often sending notice to the landlord on the intent to exercise with no additional action required by any party. The lease continues.
However, sometimes the parties overcomplicate the issue and produce unintended consequences. For example, I was just abstracting a lease that commenced in 2010. The lease granted one five year option at $27.50/sf to be exercised by giving notice to the landlord 210 days before the expiration of the term. The expiration of the term was 10/31/15. Notice would have been required by the beginning of April. In July 2015, an amendment was executed extending the term from 11/1/15-10/31/20 at $27.50/sf. The amendment included typical language – “Except as expressly modified and amended by this Amendment, the provisions of the Lease shall remain in full force and effect…” Therefore, despite the fact that the tenant had not exercised the option on a timely basis, the terms of the lease remain in effect. The term was extended. The amendment contained no language stating that the amendment was an exercise of the option. No language stating that the tenant shall have no further rights to extend the term. Therefore, while likely not the intent, the tenant can claim that it has the right to extend the term for five years commencing 11/1/20 at $27.50/sf. Sometimes, you can get around this if the option form the lease is for specific dates or years. But in this case, no such luck.
It is imperative to think through how the language in an amendment affects the original lease.