Break Options in Leases

Under the current economic climate, more and more tenants are attempting to end their leases either to reduce expenses or due to the collapse of their business.

The first place to look is if the Lease contains a break clause. This will allow the tenant to end the lease before the expiry of the lease term by serving notice on the Landlord. However, it is very important to fully understand and follow the provisions of the break option in the lease. Failure to do so could mean the notice becomes invalid.

 The tenant should therefore consider the following:

  • Is there a requirement for the notice to be served for a specific minimum period?
  • Does the lease state that the break option is only available at specific points during the term of the lease (i.e., every 5 years of the lease)?
  • Ensure to serve the notice on the correct Landlord, at the correct address.
  • Can the notice be served by normal first-class post or is it required that it is sent by special or recorded delivery?
  • Does the break option require certain conditions to be met first? For example, that all rents and service charges are paid up to date first.
  • If it is a full repairing Lease, are there any repairs required to be carried out by the tenant? The break option could be invalidated if the lease requires this and the property is in need of repairs. It is always advised that the tenant should instruct an independent building surveyor in advance of the break date to produce a schedule of necessary works which should be sent to the landlord. The object of this exercise being that the Landlord is satisfied that any works required under the lease are dealt with upon the tenant’s exit.
  • The tenant must give vacant possession on or before the break date. This means that the tenant must remove all of its belongings from the property.

If you are considering exercising a break option, then you should look at the provisions in your lease and seek legal advise to ensure that you follow all the conditions set by the Landlord.

share this Article

Share on facebook
Share on twitter
Share on linkedin
Share on whatsapp
Share on email

Recent Articles