If your lease does not have a break clause, you are not allowed to end it. Instead, you can try to negotiate the surrender (or termination) of the lease with the landlord, or you can assign the lease to a third party (typically only with the landlord’s permission).
In this article, No Break Clause In Commercial Lease, we take a look at the process and mechanism involved.
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What are your options if there is no break clause in the contract?
Assign the lease
A lease is basically sold to a third party (the “assignee”) during the assignment process.
If you rent commercial property, there’s probably a provision in your lease that lets you transfer it to another tenant. You will have to look for a possible new tenant on your own in order to achieve this. It is likely that you will want your landlord’s approval before the assignment can be finalised, as they will anticipate that the new tenant will live up to the same standards they initially set for you.
Even if your landlord cannot lawfully refuse to allow the assignment, they are not required to do so if the new tenant doesn’t adhere to the conditions outlined in your lease, therefore it’s advisable to be selective in the tenant you choose.
Your lease contract will probably have limitations on when and how you can assign it. Typical limitations include the inability to assign a lease for contracts with short terms and the prohibition against assigning a lease with a few-year expiration date.
After a lease is assigned, the assignee becomes the new tenant and is in charge of making sure the tenant complies with all of the terms of the lease.
Surrender the lease
When both parties agree that the lease will be terminated and the tenant returns their interest to the landlord, the lease is considered surrendered. Formal documentation is one approach to accomplish this, although it’s not always required. The lease will be given up “by operation of law” if both the landlord and the tenant agree that it will be done so and then behave in a way that makes it impossible for the lease to be renewed.
Although it is quicker and less expensive to surrender without a formal document, there may be confusion regarding what was intended by both parties.
The essential condition is that there must be an “unequivocal” act—such as the tenant vacates the property and the landlord moves in or grants a new lease for the same space—that demonstrates both parties’ acceptance that the lease is about to expire.
This can happen deliberately, if the landlord agrees that the previous lease has been given up and issues a new lease to a different party. If they both agree to modify the lease in order to prolong the term or the premises, it may also occur by accident. Whether or not the parties intended it, this will be interpreted as a surrender by operation of law.
How we can help
We have a proven track record of helping clients negotiate ending their commercial tenancy. We will guide you through the process and ensure all checks are carried out swiftly and efficiently and we firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting.
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How to Contact Our Commercial Property Solicitors
It is important for you to be well informed about the issues and possible implications of no break clause in a commercial lease. However, expert legal support is crucial in terms of ensuring a positive outcome to your case.
To speak to our Commercial Property solicitors today, simply call us on 0345 901 0445, or click here to make a free enquiry. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.
Disclaimer: This article provides general information only and does not constitute legal advice on any individual circumstances.
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