• Commercial property
  • October 28, 2021

What Is A Break Clause In A Commercial Lease?

The Coronavirus pandemic and associated lockdowns and the energy crisis which followed on its heels have exposed how vulnerable SMEs are to the vicissitudes of life. However, SME owners, who make up the backbone of the British economy (99.9% of all businesses fall into this category and SMEs employ three-fifths of British workers) have always been a positive bunch, revered for ‘just getting on with it’. If you are an SME owner, one way you can protect your organisation against both positive and negative impacts is to ensure your commercial lease includes at least one break clause.

What is a break clause?

A break clause is a term in a commercial lease that permits either the landlord or the tenant to terminate the lease before its official end date. 

When can you exercise a break clause?

The right to break may arise on one or more specified dates or at any time during the term of the lease on a rolling basis.

What are the restrictions on a break clause?

It would be highly unusual for your landlord not to place stringent conditions on your right to exercise a break clause. Common restrictions include:
  • you must have paid all rent owing
  • all the covenants of the lease must be performed
  • you cannot be in material breach of any repairing covenants
  • you must give vacant possession, i.e. leave the property completely empty

The conditions of a break clause can become a major barrier for tenants wanting to exercise a break clause because if not negotiated cleverly, your landlord may legally refuse your right to break for a trivial covenant breach.

Summing up

A break clause will provide you with the flexibility to end your commercial lease early if the premises no longer fits your requirements. But always remember, it is in your landlord’s best interests to deny the right to break, especially if there is a glut of vacant properties in your area. A Commercial Property Solicitor will advise you on negotiating a robust break clause with conditions that can be realistically met. 


Get legal assistance from LawBite

If you are a landlord or a tenant and want to find out more about break clauses and how you can protect your commercial lease, you can contact LawBite’s expert commercial property lawyers who can provide strategic and practical business legal advice at all stages of the commercial lease agreement process.
If you are dealing with issues arising from your existing commercial premises, whether freehold or leasehold, contentious or non-contentious, our commercial property solicitors are on hand to advise. 
Book a free 15-minute consultation today to discuss your legal issues with our solicitors.

Additional useful information

In closing

Nothing in this article constitutes legal advice on which you should rely. The article is provided for general information purposes only. Professional legal advice should always be sought before taking any action relating to or relying on the content of this article. Our Platform Terms of Use apply to this article.

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