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Break Clauses

Leaving a commercial lease early

If you are looking to leave your leasehold premises early you may look to use the break clause if one is included in your leasehold agreement.

It is important that any notice exercising the break must comply strictly with the requirements of the lease as to timing and method of service.

A right to terminate the lease before the end of the term can be a very valuable right. However, faced with the prospect of an empty property a landlord may look for grounds to challenge the tenant’s right to break the lease.

There are two key areas that may cause problems.

Timing

It is important that any notice exercising the break must comply strictly with the requirements of the lease as to timing and method of service.  This is something as a tenant, you cannot afford to get wrong. Add a date three to six months before the last date for giving notice to your diary, to give you ample time to consider your options, and take advice. This advice will include how much rent has to be paid by the break date and whether the Tenant is entitled to a refund for the period after the lease ends.

Condition

The second problem area relates to dilapidations.  Many older leases make the right to break conditional upon compliance with the terms of the lease down to the break date. We advise tenants to resist this condition where possible when signing a lease. 

Where it applies, the onus is on the tenant to hand the premises back in the state required by the lease. If works are required, the tenant must complete them before the Break Date. The landlord does not generally have to tell the tenant what works to do or if it is going to challenge the quality of work done.

If you would like to know more about solutions to the problems that can arise in connection with break clauses, please contact Caroline Wilton or Martin Banham-Hall on 01908 662277