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Terminating a Commercial Lease

Terminating a commercial lease is not always a simple proposition. It is often not possible to simply give notice and walk away. While there are usually options open to you, as either a landlord or a tenant, it is essential that the correct legal process is followed throughout, or you could face a substantial claim for breaching the terms of your lease.

As a tenant, you may be wondering how to get out of a commercial lease early for a number of reasons, for example, if you wish to move to new premises or if your business simply cannot keep up the rent payments.

As a landlord, you might wish to let the property at a higher rent, develop it or use it in a different way. At Woolsey Morris & Kennedy, we can advise you of your options and ensure that the proper procedure is followed so that you can be released from your obligations.

Some of the possibilities for terminating a commercial lease agreement include:

  • Negotiating the voluntary surrender of the lease
  • Break clauses
  • Ending a lease early due to a breach of the lease terms
  • Force majeure
  • Lease assignment
  • Subletting

Our commercial lease team have a high level of expertise across a range of sectors and act for both landlords and tenants in lease negotiations. We can recommend the best course of action for your circumstances and work with you to ensure that your rights are protected.

Commercial property is a complex area of law with particularly onerous responsibilities attached, and it is always recommended that you seek legal advice from an expert before taking action.

Speak to our commercial lease solicitors in Sidcup, the London Borough of Bexley, Kent

For expert advice on ending a commercial lease, please speak to a member of our team today.

For more information in respect of our services, see our Commercial Property page.

How we can help with terminating a commercial lease

Negotiating the voluntary surrender of the lease

If you no longer want to retain the commercial premises that you are leasing because you wish to move on, it may be possible to negotiate an early termination of the lease with your landlord, paying a premium in return for the lease termination. This will pay towards rent while the landlord finds a new tenant as well as for any repairs that may be needed.

Once an agreement has been reached, our team can ensure that the correct agreement to surrender is put in writing so that you can be sure that your liabilities have been ended.

Break clauses

Your lease may include a break clause for terminating a lease early before the end of the full term. The break clause will generally include detailed provisions for how notice is to be given, and we can draw up the necessary documentation to ensure you are compliant.

Ending a lease early due to a breach of the lease terms

Where the terms of a lease have been breached by the tenant, for example, by not paying the rent, then the landlord may be able to forfeit the lease.

We can advise you whether the breach is sufficient to give you the right of forfeiture. If it is, we will ensure that the correct legal process is followed. This is essential, because without it, as a landlord, you could face a claim of wrongful forfeiture.

Once the correct demands and notices have been served, where a right of forfeiture exists, a landlord has the right to take back the property either by peaceable re-entry or via court proceedings. We will explain the requirements for a peaceable re-entry and, if this is not possible, represent you in court to obtain possession.

Force majeure

A commercial lease may contain a force majeure clause that sets out unforeseen circumstances in which a lease could be ended. Examples include severe flooding or other natural disasters. Whether this can be relied on to terminate the lease depends on the wording of the clause.

We can advise you as to whether you can use a force majeure clause, and if so, how to enforce it.

Lease assignment

Your lease may permit you to assign it to a third person. It is often the case that a landlord will not release a tenant from their obligations, even if the lease is assigned, however, and you may be asked to provide a guarantee. We can negotiate an assignment on your behalf and ensure that the guarantee is as favourable as possible where this is required.

Subletting

If you are a tenant who no longer wants the lease you have signed, then you may be able to sublet the property. The details of what you will be allowed to do will be contained in your lease, but broadly speaking, subletting involves finding a tenant who will lease the property from you.

We can advise you of what you are permitted to do under the terms of your lease and ensure that you have a sound agreement in place with the new tenant so that your position is protected as far as possible.

Your landlord will generally want to approve the new tenant, and you will remain liable for payment of the rent to the landlord as well as for repairs and maintenance, in accordance with your own lease with the landlord, which will be referred to as the headlease.

Our commercial lease advice fees

Hourly rates for our commercial lease solicitors

Our charges are based on a competitive hourly rate. This allows you to get exactly the level of service you require.

All costs will be agreed upon in advance, so you always stay in charge of your expenditure.

Termination of lease FAQs

Can a commercial lease be terminated early?

A commercial lease can be terminated early, but it is often not a simple process. It is essential not to breach the terms of the lease as this could be potentially costly.

As above, the main ways of ending a commercial lease are by agreement, by using a break clause, assigning or subletting, where the terms of the lease have been breached or where the lease permits forfeiture for some other reason.

Can I walk away from a commercial lease?

If you simply walk away from a commercial lease, the landlord can pursue you, and any guarantor for the rent for the rest of the term of the lease or until a new tenant leases the property. You may also find yourself liable for repairs to put the property into a good and marketable condition.

If you no longer want to or you are unable to continue with the lease, it is strongly recommended that you seek legal advice and end the lease through a correct legal process.

If the landlord has to pursue you through the court system, you could find yourself liable for their legal costs as well as the unpaid rent.

How does a tenant terminate a commercial lease?

If the landlord has agreed to let you surrender the lease, then a formal written agreement, known as a deed of surrender, should be signed by you and the landlord.

Alternatively, if you both act in a way that assumes the lease is at an end, for example, you give the keys to the landlord, and he accepts them, it will legally be considered to have been surrendered. Having a written agreement in place is preferable.

How much notice do I have to give on a commercial lease?

If you wish to vacate the property after the term of the lease has expired, you will need to comply with the requirements of the lease or send notice in the form of a Section 27 notice. The amount of notice needs to be at least the amount of notice required in the lease or three months where no notice period is stipulated.

Get in touch with our commercial lease solicitors in Sidcup, the London Borough of Bexley, Kent

For expert advice on ending a commercial lease, please speak to a member of our team today.

 

  • Mark Williams
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