lease-arbitration-expert

What is Lease Arbitration?

Lease Arbitration = Binding dispute resolution mechanism used when landlord and tenant cannot agree on renewal rent or fair market value (FMV).

Most common use: Rent determination for renewal options where rent set at "Fair Market Value" or "Fair Market Rent"

Why needed: If renewal clause says "rent at FMV" but parties can't agree on FMV, arbitration provides objective determination.

When Arbitration is Triggered

Renewal option language: "Tenant may renew lease for additional 5-year term at Fair Market Rent for premises, to be determined by agreement of parties or, failing agreement, by arbitration in accordance with Section [X]."

Triggering event:

1. Tenant exercises renewal option
2. Landlord proposes renewal rent
3. Tenant counter-proposes different rent
4. Parties negotiate but cannot agree within specified period (typically 30-60 days)
5. Either party invokes arbitration