Can you break your lease? You might have some options

On Behalf of | Apr 20, 2020 | Business Contracts and Leases

If you’ve leased space for your business in an office building, shopping center or other commercial space, you may think you can only get out of it under extraordinary circumstances. However, if you find that the space isn’t as conducive to bringing in business as you’d hoped or if you simply find another place you like better, you may be able to get out of that commercial lease early. The first thing to do is to review the lease carefully. Look for clauses that might apply. For example, does the lease have a co-tenancy clause that allows you to leave if an anchor tenant leaves? If you were depending on people attending a movie theater in your complex to come to your restaurant before or after a show and that theater closes, you might be able to get out of the lease. You may have a bailout clause that allows you to get out of the lease if you aren’t able to bring in a specific amount of business or reach a certain sales level. If the landlord has violated a “substantive” provision in the lease, you may be able to break it. Look through the lease to see all that the landlord has agreed to do. For example, if it’s their responsibility to make repairs to the exterior and you’re still missing part of your roof from the last tornado, they’ve likely breached the contract. Even if you have no “out” in the lease, your landlord may be willing to let you leave without paying the full amount you’d have paid if you’d remained until the end of your lease if you’re in a space that they can easily lease to someone else — possibly for more money. That would put you in a stronger negotiating position. Another possible option is to find someone yourself who will move in to the space. There are several ways to do this. One is to “assign” the space — transfer your lease obligations — to someone else. Another is to sub-lease it to someone who will be responsible for the rent. However, with a sub-lease, you still are responsible for that party complying with the lease — including making timely rent payments. You can see why working to negotiate favorable terms is important before signing a commercial lease. However, if you’re looking for a way out, an experienced attorney can help you.