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There may be a time when you want to end your commercial lease. This may be because you have found better premises or the lease is costing your business too much. Whatever the reason may be, you must end your lease in an authorised way that protects your position. Otherwise, you may be liable to legal proceedings. This article will outline what the procedures are when ending your commercial lease and whether your contract allows you to use them.

Why Should I Be Protected?

If you want to end your commercial lease, it is important that you are free of all legal obligations once this ends. This means that you are entirely off the lease and do not owe any money to your landlord. If you are free from all obligations, you are then protected from being liable in any way. Some responsibilities that you may have to uphold include any rental payments or cleaning and maintenance of the premises.

Waiting for Your Term to End

The most common and easiest way to end your lease is to wait for your term to expire. This will be the date that you originally agreed with your landlord. Once you have reached this date, you have no further obligations to your landlord and you are protected from having to pay any more money. This is the best way to make sure that you are protected. However, it may not be in your interest to wait for your lease to end. For instance, this may be because you need to get out of the lease immediately. Therefore, it might be best to use another option.

Termination Clause

Your lease may contain a termination clause. A termination clause allows you to cancel the agreement if certain conditions have been met. They are useful as once the agreement has been cancelled, there are no binding obligations on either party, and it is as if the contract was never performed. 

However, the main issue with termination clauses is that you must meet particular circumstances. For example, it could be a breach of contract or some other situation that allows for termination. These conditions are set by the parties when they negotiate the contract. If you want to end your commercial lease and have met the conditions to activate the termination clause, you should use it.

It is important to note that your landlord can also utilise the termination clause if they can meet all the requirements. 

Assignment of Your Lease

Another way that you can end your commercial lease but still stay protected is to assign your lease. The assignment is the process whereby a person assigns their rights under a contract to another party. A right is a benefit to the other party. By assigning your lease to another party, you are relieving yourself of the contract. However, take note that you can only assign an obligation with the express consent of the person who is receiving the assignment. This means that only once you do this are you free from any obligations under the contract.

If you only assign the rights of the contract to another party, you are still liable for any obligations under the contract. Therefore, you must get the permission of the person you are assigning the contract to, in order to make sure that both your rights and obligations have been assigned.

Mutual Agreement

Additionally, you can protect your position when ending your commercial lease through the permission of yourself and your landlord. If you explain the circumstances as to why you want to end your agreement, your landlord might be more inclined to let you end it. One way you can convince your landlord to end the agreement is to find a tenant who is willing to take over the premises. This is different from an assignment as your landlord creates a separate contract with the new party.

Key Takeaways

Many businesses will believe that ending their commercial lease is an easy thing to do. However, unless you have come to the end of your term, it can be quite difficult to do. You must make sure that you are free of any responsibilities once you do this. If you do not, you may be liable for court proceedings and be asked to pay further rent payments even if you have moved out of the premises. Therefore, it is important that your lease ends in an authorised way, such as through mutual consent or termination. A lease can also end through an assignment if both the rights and obligations of a contract have been assigned. If you need any legal assistance with commercial leases, contact LegalVision’s property and leasing lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

Will I be liable if I don’t end the lease properly?

You could be asked to pay a fee or any other conditions if you end the lease in an unauthorised way.

Is there always a termination clause in a lease agreement?

No, if there is no termination clause, then you cannot use this option.

Can I pay my landlord to end my lease?

If your landlord agrees, you can pay them a fee to end your lease early. 

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