Break Clause in Commercial Property Lease Agreement
- Details
- Written by: Wembley Solicitors
A commercial property lease usually continues until its end date unless it includes a break clause. A break clause in a commercial lease agreement provides flexibility to both landlords and tenants to terminate the lease before the actual end.
At Wembley Solicitors, our team of experienced commercial property lawyers provide legal advice to both landlords and tenants and negotiates the right terms for them.
In addition to the break clauses, we can advise on the full range of commercial lease considerations, including lease renewals, assignment of a commercial lease, sub-letting, landlord consent, rent reviews and much more.
Table of Contents
- What is a break clause in a commercial lease?
- Key aspects of a break clause in a commercial lease
- What if there is no break clause in the commercial lease agreement?
- Commercial lease solicitors in London
- Frequently Asked Questions
- Need Legal Advice & Assistance?
What is a break clause in a commercial lease?
In a commercial lease, a break clause is a provision that allows either the landlord or the tenant to terminate the lease before its specified end date. Break clauses are often included in fixed-term commercial leases. It provides an opportunity for one or both parties to end the lease early, providing flexibility and an exit strategy in case circumstances change or there is a need to vacate the premises.
Key aspects of a break clause in a commercial lease
Termination Option
A break clause grants the option to terminate the lease. This means that the party exercising the break clause can bring the lease to an end, effectively terminating their obligations and rights under the lease agreement.
Notice Period
A break clause will specify the notice period that must be given by the party intending to exercise the break option. This period is usually stated in the lease and is often around 6 to 12 months. The notice must be given in writing and served within the specified timeframe to be valid.
Conditions and Requirements
Break clauses may have conditions and requirements that must be fulfilled for the break option to be valid. These conditions can vary and may include obligations such as clearing outstanding rent payments, complying with repair or maintenance obligations, or ensuring the premises are returned in a certain condition.
Timing
Break clauses typically outline specific dates or intervals during the lease term when the break option can be exercised. For example, it may allow termination at the end of each year or after a specific number of years.
Procedure
The break clause will detail the procedure for exercising the break option. This includes the specific method of providing notice, any required documentation, and the recipient of the notice.
Consequences
If the break clause is successfully exercised and all conditions are met, the lease will terminate on the agreed-upon date specified in the break clause. However, failure to comply with the conditions or procedures outlined in the break clause can render the break option invalid, meaning the lease will continue until its original end date.
It is important for both landlords and tenants to carefully review the break clause provisions in a commercial lease agreement. Understanding the specific terms, conditions, and requirements is crucial to ensure compliance and avoid potential disputes or unintended consequences.
Seeking legal advice from a qualified professional is recommended to fully understand the implications of the break clause and its impact on the lease agreement.
What if there is no break clause in the commercial lease agreement?
If your commercial lease agreement does not contain a break clause then you will have no right to end your commercial lease earlier than the agreed date.
If don’t have a break clause or you’re not using a break clause, your landlord might agree that you can either end the lease early or pass the lease on to someone else.
Commercial lease solicitors in London
At Wembley Solicitors, our team of commercial property solicitors in London have the legal expertise to draft commercial lease break clauses to suit your requirements.
Whether you are a small, medium, or large business, our commercial lease agreement specialists will ensure your break clause gives you the legal and commercial flexibility you need.
Wembley Solicitors' commercial property law department can advise on all aspects of commercial property lease break clauses, including:
- Drafting a new break clause
- Break clauses disputes
- Break clause negotiation
- Exercising a break clause
Do you need legal advice or assistance with your commercial lease? Call our fixed-fee commercial property solicitors on 020 3417 3700 or fill in the enquiry form.
Frequently Asked Questions
Exercising a break clause means that it comes to an end earlier than the date contained in the lease agreement.
Break clauses typically contain a number of specific provisions, including:
- Who can exercise the break clause
- Dates on which the lease can be terminated early, e.g. anytime (also referred to as a rolling break), after a certain date, or on a fixed date.
- Conditions – these may include specific conditions stating that:
- The tenant must have paid all the rent due
- The tenant must have performed all relevant covenants
- The tenant must not be in material breach of any repairing covenants
- The tenant must give vacant possession
- The landlord must have an intention to redevelop the property
- Notice provisions – i.e. setting out:
- how the break notice must be sent to the other party
- when the notice is deemed to have been received. In other cases, the general notice provisions in the lease will apply.
- Underlease provisions - making it clear that any underlease will also come to an end if a break clause is exercised.
It may be possible for either party to waive a specific break clause condition; this should be done in writing, orally, or inferred by conduct. Where a landlord chooses to waive a condition of a break clause, they must have knowledge of the material facts, their right to choose to waive or not waive, and the legal effect of either. If you are considering waiving a break clause condition, it is important to seek the advice of a commercial lease Solicitor before doing so.
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Legal Disclaimer
The information provided is for general informational purposes only and should not be taken as legal advice. While we make every effort to ensure accuracy, the law may change, and the information may not reflect the most current legal developments. No warranty is given regarding the accuracy or completeness of the information, and we do not accept liability in such cases. We recommend consulting with a qualified lawyer at Moeen & Co. Solicitors before making any decisions based on the information provided on this website.
