How Can A Tenant Exit A Commercial Property Lease?

Ways To Get Out Of A Commercial Lease

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The easiest way for a tenant to exit a commercial lease is by leaving at the end of the fixed term. However, the tenant should be careful on the correct manner to do this. To discuss a commercial lease contact us today.

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Solicitors Advising On How To Exercise Commercial Lease Break Clause

A tenant may be able to exercise a break clause in their commercial lease (if the document contains such a term), allowing them to terminate the agreement before the end of the fixed period. A break clause may however have conditions attached to it by the landlord, and obligations that need to be complied with before the clause can be activated. This is an area where the advice and expertise of a commercial property solicitor can be of critical importance for a commercial tenant seeking to end their lease.

Legal Advice On Negotiating A Deed Of Surrender Is Critical

Tenants may be able to negotiate a deed of surrender with their landlord, bringing an early end to a commercial lease. A landlord may be amenable to a tenant surrendering their lease by deed if, for example, the market has improved since the lease was originally signed, and the landlord can expect to get a higher rent from a new tenant. Alternatively, faced with the reality of a tenant unable to fulfil their obligations, a landlord may agree to accept a financial premium to terminate a commercial lease before the end of the agreed term.

Can I Assign My Commercial Lease To Another Person?

In certain circumstances a tenant may be able to assign their lease to a third party, or effectively sell it, and in the process dispose of all their liabilities under the agreement. If the lease terms are particularly favourable, the assignee may need to pay a premium to acquire the lease, or alternatively the original tenant may be forced to contribute to the assignee's rent for the remainder of the lease term, or otherwise pay a 'reverse premium', if the value of the lease has declined since the agreement was signed.

How Do I Sub-Let My Commercial Property Lease?

Tenants may also be able to sub-let their lease, with the landlord's consent, to a third party. The original tenant will remain liable to the landlord under the terms of the lease, and will sign a separate sub-lease agreement with the sub-tenant. Again, clauses in the lease may inhibit the tenant's freedom of action in terms of sub-letting, and a commercial property solicitor will be needed to examine the relevant terms in the lease document.

If I Stop Paying Rent Will My Commercial Lease Come To An End?

Finally, if negotiations with a landlord to end a commercial lease fail, and in the absence of other options, the tenant may simply decide to stop paying the rent. As long as there is no personal guarantor, the landlord will then be in the same position as other creditors with claims on a failing or insolvent business. This is obviously not an ideal solution for either party, but may be the inevitable result of commercial reality.

Commercial Property Solicitor

Chris Bartlett is a solicitor specialising in Commercial Property matters. He will be happy to offer you a free telephone or face to face consultation.

James Edwards is a commercial property solicitor advising landlords and tenants on commercial leases. He also has experience in buying and selling commercial property.