Tips for Business Tenants

Sam Wakeman, of our Property Litigation department says: “Terminating commercial leases by tenants has received more attention in recent times than at any time in the last 20 years”.

This is also an area which is littered with potential pitfalls. For tenants considering terminating their lease, here are some pointers.

  1. Any termination must be with the agreement of the landlord unless the lease contains the right to terminate it early by service of a break notice.
  2. Simply vacating the premises and returning the keys does not terminate the lease.
  3. Make sure any break notice is given by the right person. This may seem obvious, but if, for example, your lease is held by your company, the notice will not be valid unless given by the company and there can be particular issues when the lease has been assigned.
  4. Issue the break notice at the right time. This will be stated in the lease but the language of the lease may not make it obvious. A period date which runs ‘from’ a day excludes that day, yet one that commences ‘on’ a day includes that day.
  5. Make sure the break notice is in the correct form. If it specifies a notice must be in writing or a particular form then ensure the notice complies.
  6. Give the break notice to the correct person in accordance with the lease. A notice delivered to the wrong person will not be valid and many leases contain clauses specifying how and where notices can be served. For example, if the lease specifies that notices must be delivered by post a fax will not suffice.
  7. Ensure you have complied with all lease terms. Most leases ensure a break notice can only be served if the tenant is not in breach. Make sure that your rent is paid and all other covenants are complied with, and if any rent payments have been made late consider if any interest is due even if the landlord has not demanded it otherwise, the notice may not be valid.
  8. Make sure you have evidence of the state of repair of the premises so that, if a dispute arises over dilapidations, you can support your position. If possible, agree the position with the landlord and remember, it may be cheaper to get some or all of the work done yourself rather than by the landlord.”

For more advice on any of these issues, please contact Sam Wakeman at s.wakeman@pj-h.co.uk or telephone 0208 658 3922.