A commercial tenant may want to bring their Lease to an end before it runs out. This is usually only possible if the Lease contains a “break clause”. Before exercising the break there are things which the tenant should check and be aware of, for example:
- The Lease should say clearly how the break is exercised, failure to follow the prescribed steps properly will mean that the attempt is ineffective and the opportunity probably lost for ever.
- The opportunity to break will usually be subject to conditions, such as being up to date with rent and other payments under the Lease and possibly compliance with other covenants as well.
- A break notice once given cannot be withdraw, so using this as a tactic to try and get a rent reduction carries risk. Exercising a break clause does not relieve the tenant of any ongoing obligations under the lease which will continue to apply until the termination date, and accrued liabilities will continue to apply beyond then.
If you are a tenant negotiating a Lease you should think about a break clause and the terms you want to apply to it and include these in your negotiations.
If you are a tenant or indeed a landlord and would like any advice in relation to these matters please contact James Matthews.