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.