Breaking a Commercial Lease

November 11, 2023



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November 30, 2023

Carneys Lawyers assists individuals and companies that are in commercial lease agreements that have gone sour. 

We outline, as follows, options available to those seeking to get out of a commercial lease: –

  1. Surrender the Lease

This avenue requires application to the landlord to end the lease. Once mutual agreement with the landlord has been reached in respect of the terms of the surrender. The landlord’s solicitor will prepare a Deed of Surrender of lease. The outgoing tenant will be required to make good the premises. 

  1. Assignment of Lease

An assignment of lease involves the transfer of the rights and obligations of an existing tenant lease to a new tenant. To effect an assignment the tenant must check that the lease contains a right to assign and then obtain the landlord’s consent. The solicitors acting for the landlord will then draft a deed of an assignment to be signed by the landlord, outgoing tenant and incoming tenant. 

  1. Early Termination Clause 

Early termination clauses (or break clauses) are sometimes incorporated in leases. As a business owner, it is particularly important that the tenant negotiate these clauses prior to entering a commercial lease. 

  1. Subletting the Premises

Subletting the premises is an option for those whose only issues with their current lease are costs. This allows the tenant to allocate a portion of its rent to another tenant while keeping the lease in the tenant’s name. As the lease is still in the tenant’s name, the tenant will still be held to its obligations by the landlord. The landlord’s consent is required for any proposed subletting arrangement. The sublease should provide a detailed outline of the subtenant’s duties and liabilities. 

  1. Licensing 

This involves allowing another party access to a portion of its leased premises. This allows greater flexibility for all parties for several reasons, including simplifying termination procedures and allowing leeway for further adjustments.

While it is useful to know how to get out of a commercial lease, it is important to thoroughly review lease terms and clauses before entering a lease.

Our team of property specialists can assist with all commercial, retail leasing and conveyancing matters.