The Evergreen Clause: What It Is And How To Avoid It

blue street capital technology leasing for big businesses

Leasing has helped thousands of businesses acquire the technology and equipment they need to grow. It is an incredibly easy way to free up cash flow without hurting your existing lines of credit. One important clause to be on the lookout for whenever you are reviewing your lease agreement is called an Evergreen Clause

  • THE EVERGREEN CLAUSE

Each Term shall automatically renew for subsequent period of the same length as the initial Term unless either party gives the other written notice of termination at least (30) days prior to expiration of the current term.

If you EVER see this phrase in your lease agreement, request to have it removed from your document before signing. This clause states that unless you notify your leasing company that you’re nearly done making payments on your lease before the last month’s payment, you are LOCKED IN ANOTHER LEASE for the same term. That’s right. If you don’t give a month’s notice, you’re in for another round of payments.

Here’s a few helpful pointers for avoiding an Evergreen Clause

  1. READ THROUGH YOUR LEASE AGREEMENT
    You’d think this is common sense, but more often than not the little fine print that you speed read through contains highly valuable information. If you miss a detail and decide later, upon finding out you missed your deadline to end the terms of your lease agreement, the law is not on your side.
  2. IF YOU CAN’T GET THE CLAUSE REMOVED, SET A REMINDER
    A good leasing partner will notify you of this language ahead of time, however if they don’t you could find yourself stuck in a lease with one of these pesky clauses, set a reminder well in advance of your notice so you can be prepared.

Have any additional tips you would like to share? Talk to us! We’d love to hear your stories. Shoot us an email at info@bluestreetcapital.com