Partner Gemma Stephenson, in our Commercial Property team, explains the potential pitfalls for commercial tenants looking to exercise a break clause in their lease.
It is long established that the terms of a break clause in a lease must be followed exactly in order for a break to be successful. Through a myriad of case law, we know that the Courts are not prepared to re-write an unfair break clause or in any way vary what was agreed between the parties – if the lease says the break must be served on pink paper, then it will not take effect if it is not, no matter how trivial the requirement may seem.
The most common issues with break clauses that we come across are:
Payment of Rent or other monies due under the lease
Service of the break notice will be dictated by the lease and the break notice must be served in the timeframe and method prescribed. It is also important to ensure it is being sent to the correct address.
Leases will provide for a period of notice, most commonly at least 6 months, whereby the notice must be served at least 6 months before the break date.
It is important that a tenant builds in time for the landlord to receive the notice after it is sent (if it is being posted), as the notice must be served or deemed served within the notice period. Service of the break notice shouldn’t be left until the last minute.
The financial implications for a tenant that fails to break a lease are often very high and usually they will not be told by the landlord that the break has failed until the last minute, by which point they may even have entered into a new lease. We strongly recommend that tenants seek expert legal advice at both stages of the break; on the negotiation of the lease itself to ensure that the break provisions are satisfactory and then to serve the break notice to give peace of mind that it has been served correctly and to provide confirmation of the requirements to be met in order to successfully to break the lease.
If you need advice on lease negotiations or breaking a lease, please get in touch with our Commercial Property team.
For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800.
This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.
