What are break notices in a commercial lease?

If you’re renting out a commercial property or intend to acquire a lease to use the property then it’s likely that you’ll come across the term ‘break notice’ at some point. But what are break notices and what should you be aware of if you’re intending to exercise it or just want to understand the notice before you sign on the dotted line?

A break clause is often negotiated between two parts before entering a lease. It’s an agreement that means either the landlord, tenant or both parties have the right to end the lease prematurely by issuing a break notice on the other party. For example, if a business wishes to end their lease early then they must serve a break notice to their landlord, as long as certain conditions are met.

When can I serve a break notice as a tenant?

Be sure to read all the conditions set out in the break clause that you signed when you initially began renting out the property. If you don’t meet the conditions, the landlord is entitled to prevent the tenant from ending the lease early. This is where a solicitor will normally enter the picture, as disputes can arise from the landlord contesting the break clause.

The conditions you must meet will differ depending on what the landlord has included, but there are a number of common conditions that landlords usually insert. You will likely have an obligation to pay all rent owed, any other payments owed and ensure that repair obligations have been met.

It is essential that a break notice is carefully drafted to ensure it meets all the conditions of the lease and the law. If the notice is incorrect in any way, the tenant is usually obligated with seeing out the remainder of the lease. This is why it’s incredibly important that you contact a break clause solicitor to ensure everything occurs smoothly.

What do I do as a landlord if a tenant serves a break notice?

Your job of ensuring that a break notice is carried out correctly begins when you have inserted a break clause in a lease that a tenant is about to sign. You must make sure the tenant understands all the conditions of the break clause and how to serve a break notice.

Before you accept a break notice from a tenant, you need to ensure that all the conditions of the lease have been met and all monies owed are paid.

If you have inserted an unconditional break clause in your lease, you simply need to ensure that the tenant leaves the property on the break date. For the tenant, they need to ensure that all their goods and fixtures are removed, keys are returned and the property isn’t occupied on the break date.

To sum up, all parties should be 100% aware of what is required in a break notice and all obligations are met.