A commercial lease’s break clause is a clause in the agreement that permits the landlord or the tenant to leave the lease early, usually before the agreed-upon period. It gives either party the option to end the lease by giving notice within a predetermined window of time, provided that certain requirements outlined in the lease are met.
Break clauses are not always present in commercial leases. The landlord and the tenant may agree to disagree on the inclusion of a break clause. To entice prospective tenants who desire flexibility, some landlords might be amenable to including this provision. Some landlords, however, might value the security of a fixed-term agreement without the chance of an early termination. In this article, What Is A Break Clause In A Commercial Lease, we take a look at the process and mechanism involved.
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Negotiating a break clause into a commercial lease
When a commercial lease is terminated without a break clause, problems can arise. In this instance, you will either have to complete the terms of the lease or take active steps to negotiate an early termination with the landlord. It is important to understand that leaving without a valid reason may result in fines and legal repercussions. It’s best to handle these kinds of situations carefully and get the right legal advice to protect your rights.
Negotiating a break clause can give much-needed flexibility when signing a commercial lease and it is advisable to consider the following points:
Establish the earliest possible date of termination of the lease. This will help decide the terms and conditions for activating the break clause, including the notice period.
When deciding how long to provide notice, take into account the nature of your business and industry norms to ensure that both parties have enough time to react to the termination.
It is crucial to discuss the requirements the break clause must satisfy in order to be valid. Make sure you understand what obligations, repairs, and rent payments need to be completed before using the break clause.
What is the process for giving notice for a break clause?
Before serving the break notice, as a tenant, you should think about conducting a compliance audit with the guidance of a surveyor. After that, you can take action to address any breaches of the lease. This is especially crucial in cases where the break clause requires such compliance.
The break notice must be served promptly and strictly in compliance with the lease’s terms. In addition to the break clause itself, the lease may have further terms about serving the break notice. The break clause typically needs to be used by each tenant if there are two or more.
Kee all documentation attesting to the notice’s posting or delivery method in a safe pace. The party giving the notice may ask for the receiving party to acknowledge receipt if the lease contains no terms pertaining to notice of termination; nevertheless, the receiving party is not required to comply with such a request.
A notification reserving the right to terminate the lease cannot be withdrawn once it has been served. The lease can still expire even if both the landlord and the tenant decide not to use the break notice. Rather, a lease agreement of this kind between the parties will be considered as the grant of a new lease, which will come into force immediately upon the expiration of the previous lease as per the break provision.
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We have a proven track record of helping clients negotiate break clauses into commercial leases. 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 a break clause. 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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