Leasing office equipment is supposed to be the more cost-effective alternative to buying, isn’t it? If you have this common clause in your contract, you may be paying more than you have to.
You might want to scour your existing contracts for “evergreen clauses.” They automatically renew the lease at the end of the term. Not something you want. And if your company is not on top of these, you will miss your chance to renegotiate your terms or — worse — keep paying for equipment you no longer need or use.
Break out your magnifying glass. They’re often buried in the fine print, but here are some examples of what evergreen clauses look like, courtesy of one equipment leasing vendor:
Example 1: “… you must notify us by certified mail between 90 and 180 days prior to the end of the Lease Term if you intend on returning the equipment. If you do not notify us, the Lease will automatically extend for 12 months …”
Example 2: “The term will be extended automatically for successive 12 month terms unless you send us written notice you do not want it renewed at least 30 days before the end of any term …”
Example 3: “… No more than 180 days and no less than 90 days prior to the end of the Term, Lessee shall give Lessor written notice of Lessee’s intention… If Lessee fails to so notify Lessor or, having notified Lessor, Lessee fails to return the Equipment at the end of the Term… at Lessor’s option automatically renew for another 6-month period under the same terms and conditions …”
Example 4:“…On or before one hundred twenty (120) days prior to expiration of the initial term of this Lease, Lessee shall give Lessor written notice by certified mail of Lessee’s intention to return the Equipment to Lessor… If Lessee fails to notify Lessor as provided herein, this Lease, at Lessor’s option, shall renew for additional terms of on hundred twenty (120) days each at a periodic rent equal to the periodic stated herein …”