What is a break clause and do you need one?

June 28 , 2019
June 28 , 2019
June 28 , 2019

What is a break clause and do you need one?

June 28 , 2019
June 28 , 2019

For some businesses, taking out a commercial lease can seem like a big commitment. They are typically longer than residential leases and normally cover a period of 5-25 years or longer. If the thought of tying yourself into a commercial lease for a long period is unsettling, you may wish to negotiate a break clause. This is a provision within the lease which allows you to end the tenancy early. This is something Saracens Solicitors can negotiate for you when we act as your commercial lease solicitor in London.

A break clause can take a number of different forms. It usually comes into play after a certain period of the lease has already passed. This allows for a degree of security for both parties.

Some break clauses are conditional. This means that they can only be exercised if certain obligations are met. Commonly these relate to the condition of the building and any adjustments that are made during the tenancy. It is important that both parties are clear on the conditions attached to a break clause as this is a common source of dispute.

At Saracens Solicitors, we are committed to ensuring that you understand the terms of your lease completely when we act as your commercial lease solicitor in London. This means you can make an informed decision about whether to go ahead.

Some important considerations

Often a break clause is mutual. Once the terms of the clause come into effect, it may be exercised by the landlord or the tenant. If you do not want this to be the case, we may be able to restrict the flexibility of the break clause when acting as your commercial lease solicitor in London.

A break clause can affect the level of rent payable. For example, the landlord may wish to raise the cost of the rent to compensate for the potential loss of earnings if the tenant decides to leave the property early. The tenant may feel that the break clause offers an attractive advantage when it comes to passing on the lease to a new tenant so a lower rent might be more appropriate. The scope for interpretation allows both parties to negotiate a mutually beneficial agreement.

RECENT POSTS

Banking & Finance

Company Restructuring and Asset Protection – Coronavirus (COVID-19)

Overnight, many businesses have gone from doing financially ok or financially well, to survival mode. And we get it. But when things get tough, trying …

READ MORE
Commercial Property

Commercial Lease Agreement Review – Coronavirus (COVID-19)

COVID-19 has brought disruption to businesses across the globe at an unprecedented level. We are fielding calls and emails from landlords and tenants, scrambling with …

READ MORE
Commercial Litigation

Raising the Roof – Forfeiture of a Commercial Lease | Litigation

Raising the Roof – Forfeiture of a Commercial Lease | Litigation Imagine you are a tenant of a commercial property. Business may be slow and …

READ MORE
Commercial Law

Becoming a drug dealer, the legal way | Healthcare | Commercial Law

Opening a pharmacy is often what most pharmacists seek to achieve; a life ambition. But all too frequently it is a bad case of pre-pharmacy …

READ MORE

CATEGORIES

  • Accepted file types: doc, docx, pdf.
  • This field is for validation purposes and should be left unchanged.