A commercial lease is a very specific contract between the landlord and the company that’s leasing the space. The terms of these contracts are important because they outline the responsibilities between the two parties. The lease agreement also sets the standards for what happens if either party doesn’t comply with its terms.
When you enter into a commercial lease, you agree that your company will occupy the space and pay the lease payments for a specific amount of time. But, what happens if you need to terminate the lease before it expires? More than likely, you will need to somehow minimize the financial blow that your company could experience as a result.
What happens if you need to break a commercial lease?
Before you attempt to end your commercial lease early, you need to carefully review its terms. Don’t trust your memory. Sometimes a lease will give you the option of subletting to another business (usually with the property owner’s approval) for the remainder of the term.
You may also have an “exit” clause that allows you to leave under certain conditions, including a decline in foot traffic, the loss of anchor stores in a plaza, declining sales and so on.
You may even be able to negotiate a deal with the landlord to pay a buy-out. This is usually less than the cost of paying out the remainder of the lease. It’s up to the landlord, but you should have a good chance if the location is in high demand and likely to find a new tenant quickly.
Remember, protecting your company must be your top concern. You should determine the best way to do this, so contacting your attorney is a good idea.