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Can commercial tenants break a lease early?

On Behalf of | Nov 21, 2022 | Real Estate Litigation

As a commercial real estate owner, it’s important to you to keep tenants in your properties. For one thing, you need to make sure that all of your costs are covered. Additionally, you care about that local community and you want to see businesses thrive.

However, one of your business owners may want to break their lease early. Since this is a legally binding document, they can’t just decide to stop paying you and leave the space. So how can they do this and what steps do they need to take?

Are there any termination clauses?

One of the first things to think about is if the lease has any termination language, such as clauses saying when that lease can be broken early. For instance, some business owners will request a termination clause saying that they can walk away from the space if they don’t hit earning projections over the first year. This protects them if it turns out that the space is not a good fit for their business.

Are you willing to work with them?

Even if there are no termination clauses, if the tenant is serious about wanting to leave the property, you may be able to work with them to find a tactic that benefits both of you. For example, some landlords will request that tenants find people to sublease the space for the rest of the term of that lease. Other landlords will allow them to break the lease early if they’ll pay for an extra few months, during which that landlord can find another tenant for the space. 

What you decide to do is up to you, but you may have to ensure that it fits your needs and follows all of the proper legal steps.