What Does The Break Clause Mean In Your Commercial Property Lease?

There are lots of parts of your commercial property lease that you will need to carefully consider. This is the same if you are a commercial property landlord or tenant. One of the main parts of the commercial property lease that you will need to carefully consider is the Break Clause. This area of the lease will cover the break clause, possible early termination and conditions surrounding it.

The break clause within the lease gives the tenant and the landlord flexibility. However, they are a common litigation trap when the conditions are drafted too strictly. The goal of the break clause in your commercial property lease is effectiveness, but without making either party feel ambushed. This is where our commercial property lawyers can help. We will work with you to draft or review the break clause within your commercial property to ensure you, your business and your investment are protected.

We will look at the conditions with you to ensure that they are limited to essentials only. Each validity will be tied to payment of physical rent only and not to giving vacant possession. We will ensure that terms like “material compliance with all covenants” and other catch-all terms will be avoided within the lease too.

Our commercial property law solicitors will ensure that the term ‘vacant possession’ is clearly defined too. It will show that this term means removal of goods, de-branding of the premises, returns of keys and fobs as well as the completion of meter readings.

If a break fee or notice is required, this will be clearly stated too. The lease will confirm if a fee is required and the amount and payment method will be clearly stated too. The lease will specify not just the notice period but also the service method. Exact and correct details of the recipient will also be clearly stated. If service can be given by email, it will be stated how this can happen and only is you are confident in receipt rules and mailbox monitoring.

Reasonable reinstatement obligations for alterations and signage will be clearly stated for the ‘yielding up’ part of the break clause within the commercial property lease too. There will be a notice mechanism included. This is so the tenant knows exactly what the landlord wants reinstated when they leave the property.

There will also be a waiver and confirmation. This will permit the landlord to waive the minor defects in compliance. This will be confirmed in writing that the break has been validly exercised. In turn, both parties will gain certainty.

It is highly recommended that you speak to a professional and experienced commercial property lease law specialists. They will ensure that the break clauses in your lease avoids break disputes which can become very expensive. A tight, structured and fair commercial property lease will dramatically reduce the risk of break clause disputes.

Call our commercial property solicitors now. We can show you how we can help you with the drafting or reviewing of your lease and the break clause.