Most Leases have a “break clause” that allows the Tenant to get out of the lease before the end of the full term if they decide the business is not working out. This is something I always try and negotiate for my clients. The Break Clause allows the tenant (and sometimes the landlord too) an option to break or terminate the lease after 5 or, sometimes less, and effectively hand the premises back to the landlord.
It is vital the store owner or office tenant gives his landlord the requisite 3-6 months notice under the Break Clause that he intends to invoke its provisions. It will be difficult for any tenant to diary this for action in 5 or 10 years time, but if a busy tenant forgets about the Break Clause or gives his landlord less than the required notice he will find all his entitlements could disappear and he cannot terminate the lease early.
To avoid this pitfall, any tenant of a shop or office should ask his solicitor or agent to diary ahead the date and timing of this break option.
Any tenant who uses the Break Clause will have to pay any rent and service charge, including arrears, up to date of service of notice. In some cases, depending on the lease provisions, the tenant may also have to pay a premium or once off payment for the right to break the lease.
A tenant may also be liable for necessary costs of repair ( excluding wear and tear ) to the premises before they are handed back to the landlord for re-letting. So before a tenant exercises this Break Clause, he should be aware that rent, service charge, premium and possibly extra costs of repair may also have to be paid by him on the same date.
So any tenant should be careful not to throw away his entitlement to choose to terminate his lease earlier than expected but at the same time be mindful that handing the lease back to his landlord may incur some additional expense.