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How to break a lease on a commercial property

Posted on 21 November 2018

How to break a lease on a commercial property

Posted in Advice

How can a tenant break a lease early on a commercial property?

Break options within a commercial lease can sometimes be a battleground for landlords and tenants. The break option provides the tenant with an opportunity to relocate to cheaper or more suitable premises and even to renegotiate the terms of a lease.
When a business needs to respond proactively to changing circumstances, a break option can come as a commercial lifeline for a tenant. As such, it is imperative for a tenant to serve the notice exercising the break option absolutely correctly to benefit and for a landlord keen to retain occupancy of the premises, it is likewise important to ensure that the notice complies with the lease.

A dispute may arise when a Notice is not served correctly

If a Notice is not served correctly, companies, both large and small, can find themselves affected. In the Court of Appeal case of, Friends Life Ltd v Siemens Hearing Instruments Ltd (2014) EWCA 382 these huge companies came head to head in such a dispute. The Court held that a notice to exercise a break option was ineffective as it did not comply with all the specific requirements as set out in the lease. The outcome has led to concern that more tenants will now be challenged by their landlords seeking to protect rental income.

What can a commercial tenant do to protect their lease?

Ensure that when taking your lease, you fully understand what your break options mean in practice. Diarise the key dates providing a trigger for the option and be prepared to serve your notice in exactly the correct format, to the exact correct location and the correctly named Landlord.
If you are a Commercial Landlord, you should be very clear on how a tenant is to serve a break option Notice, particularly if it is likely that you will find it difficult to re-let the premises. Ensure that the Notice complies with your commercial lease and double-check all of the details.

Advice on serving a Notice correctly

If you would like some advice or guidance on how to service the Notice correctly, or alternatively if you are a tenant and would like some advice on a Notice you have received please contact Winston Solicitors on 0113 320 5000 to discuss your requirements

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