Lease break clauses are important protections that commercial tenants rely on as a key exit strategy. There may be circumstances in which a tenant wishes to assign their lease to a third party. Moreover, depending on how your lease is drafted, an assignment of it could remove a break right. This can cause problems for future tenants and may affect your ability to assign the lease. This article considers how break clause rights may no longer apply on lease assignment and what commercial tenants should consider when taking on a lease with break clause rights.<\/p>\n\n\n\n
Entering into a commercial lease usually involves committing to a range of obligations for the full contractual term. Though these commitments may be acceptable to a business at the outset, circumstances can change over time. A business may need to relocate, expand into larger premises, or reduce space to reflect changes in staffing levels or trading conditions. <\/p>\n\n\n\n
A break clause gives a tenant a contractual mechanism to end the lease early by serving notice and complying with any conditions specified in the lease.<\/p>\n<\/div>\n\n\n\n
A break clause<\/a> gives you the right to end your lease and will usually specify who may use that right. <\/p>\n\n\n\n In the absence of any clause to the contrary, the law usually allows the original party to the lease and the successors (e.g. a new tenant to whom the lease is assigned) to exercise the break right. Although this is the default position, leases can contain express drafting that alters or overrides it.\u00a0<\/p>\n\n\n\n For example, a lease may state that the break right is personal to the original landlord or tenant and may be used only while that party holds the lease.<\/p>\n<\/div>\n\n\n\n Tenants should therefore approach personal break clause rights with caution. While such rights may appear attractive at the outset, they can lose their value if the tenant later needs to transfer the lease. This is particularly relevant where a tenant anticipates the possibility of assigning their lease in the future. <\/p>\n\n\n\n\n\n Continue reading this article below the form\n <\/i>\n<\/a>\n