blog.cat.realestate6 min read9/5/2026

Option in a Rental Agreement: Can the Landlord Raise the Rent Before Renewal?

The existence of an option does not always freeze the rent, but neither does it give the landlord the right to set any new price. The precise wording of the agreement, timely notice, and a predetermined mechanism for revising the rent are decisive.

Numbers and facts

•3 months — the notice period in Case No. 83042
•3 years — the additional period granted there
•750 shekels — half of the arbitration fee in the case
•35 days — the deadline for paying that fee
•30 days — the deadline for appealing the decision

First, Determine Exactly What You Were Promised

An option is one party’s right to extend the rental period without the other party’s renewed consent, under the terms set out in the agreement. If it expressly states that the extension is on the same terms, at the same rent, or subject to predetermined indexation, the landlord cannot impose a different calculation after the option is exercised. In such a case, a demand for additional payment may be considered a breach of the agreement rather than an offer the tenant must accept. However, if the text merely refers to the possibility of discussing an extension, it may be an invitation to negotiate rather than a genuine option.

How to Exercise the Option Without Losing It Over a Formality

The procedure in the agreement must be followed literally: check the final date for giving notice, the recipient, and the permitted method of delivery. The notice must be unequivocal: the tenant is exercising the option, not “willing to stay if the rent is reduced”—conditional wording may appear to be an offer to enter into a new agreement. Keep the letter, proof of delivery, and the landlord’s response; it is best to document a telephone conversation immediately in a written summary. Even if the parties usually communicate through a messaging app, where the agreement requires an official letter, the message should also be sent using the prescribed method.

When a Rent Increase Contradicts the Agreement

An increase is particularly vulnerable if the agreement fixes the existing rent, a specific amount for the additional period, a percentage increase, or linkage to an index. The landlord cannot replace the agreed mechanism by arguing that apartments in the neighborhood have become more expensive. According to the Kol Zchut portal’s explanation, a timely exercised option may be specifically enforced, and refusal to honor it may give rise to a claim for compensation for damages. The general legal framework for rental agreements is established by the Rental and Borrowing Law, 1971, but the outcome of a particular dispute depends primarily on the text of the signed agreement.

Why the Word “Extend” Does Not Yet Guarantee the Same Rent

The partial ruling of the Eretz Hemdah–Gazit Arbitration Court in Jerusalem in Case No. 83042, dated February 12, 2023, is instructive. The agreement did not contain the word “option,” but it required notice of the wish to extend the rental period no later than three months in advance; the court recognized the tenant’s unilateral right to remain. At the same time, the previous rent was not preserved: the parties had to determine reasonable market rent in light of the place and time because the right to the old rate had not been expressly stipulated. The court also cited the position of the Supreme Court of Israel in Case No. 5566/18: the expression “extension of the agreement” does not, by itself, preclude changes to its terms.

What the Court Will Examine and What Evidence to Gather

The court will examine not only the heading of the clause but also its precise wording, the notice period, related payment provisions, and whether the proposed interpretation deprives the option of practical meaning. Important evidence includes the complete signed agreement and its appendices, proof of timely notice, correspondence concerning the increase, payment history, and documents showing the tenant’s performance of their obligations. If the rent for the additional period is not specified, dated listings for comparable apartments and a professional appraisal may be useful: the landlord’s demand does not become the market price merely because the landlord stated it. Evidence showing the absence of breaches should also be preserved, because the agreement may make the option conditional on proper performance of obligations.

FAQ

If the agreement expressly says “option,” does the rent remain unchanged?

The terms of the clause itself will usually be decisive. If no rent adjustment is provided for, a demand for a new price may contradict the agreed option; if indexation, a percentage, or a new amount is specified, that mechanism applies.

Is there an option if the word “option” does not appear in the agreement?

Sometimes. In Case No. 83042, the tenant’s right was recognized on the basis of wording concerning an extension and the obligation to notify the landlord three months in advance, even though the word itself was absent. However, the unclear text also created a dispute over the price and the duration of the additional period.

Can the tenant agree to the increase and later demand repayment of the overpayment?

Such a step may be interpreted as consent to the new price, especially if documented in writing or through payments. Before transferring the increased amount, it is important to state your position in writing and preserve all correspondence.

What should the tenant do if the landlord refuses to recognize an option that was exercised on time?

First, it is advisable to send written notice referring to the specific clause and attach proof of the original delivery. According to Kol Zchut, the tenant may seek court-ordered enforcement of the extension or decline enforcement and claim proven damages.

Can the landlord change the locks because of a dispute over the extension?

Self-help eviction, including changing the locks, disconnecting electricity, or removing belongings, is not a proper procedure. To compel the tenant to vacate the apartment, the landlord must use judicial proceedings and then the judgment enforcement procedure.

What to do next

Find the option clause and separately note the deadline, method of notice, duration of the extension, and pricing formula. Exercise the option without additional conditions and retain proof of delivery; if a dispute arises, gather the agreement, correspondence, payments, and data on comparable rentals. If the wording is ambiguous or the landlord threatens eviction, it is useful to determine in advance what dispute-resolution procedure is available.