Top Things You Need to Be Aware of When Breaking a Lease


There are a number of valid reasons why you need to terminate a property lease. You could be quitting the business for reasons of ill health or for better business prospects in another location. You could have had a family emergency that may be forcing you out of your business or even a new job that could be more lucrative than your current business.

Usually, when you terminate a lease contract before the date mentioned in the agreement, it tends to be expensive, however depending upon your approach and the circumstances involved, there are a few ways of how you could try and minimize it.

Why Breaking a Lease Can Be Costly

When you lease a commercial property, you need to enter into a lease contract with the property owner that commits you to renting the premises for a particular sum payable every month for a specific time period. The lease entitles you to retain the use of the space for the specified period and the rent payable cannot be increased during that time. While the tenancy agreement will usually be in writing, oral or implied agreements are also valid.

Breaking the lease amounts to breaking the contract, and you can be held responsible by the landlord for the sum due to him till the end of the agreement. For example, if your lease agreement is for $2,000 a month and you want to quit three months before the end of the lease, you are legally responsible for paying a sum of $6,000 to the landlord. However, you can examine the following five ways of reducing the monetary damages:

Be Frank with the Landlord

When attempting to exit out of the lease agreement, it is always a good policy to be completely open about the reasons to your landlord. If your business is not faring too well due to reasons of the location or the wrong demographics or because your personal circumstances have changed, taking your landlord into confidence in most cases would be best.

It will enable him to appreciate your situation and agree to give you some, if not full, relief from the balance payment that he is legally entitled to. In case, he is amenable to letting you off the hook, then you should get him to issue a written release that is signed by both of you.

Identify a Sub-Lessee

In case you cannot terminate the lease, you could try and find someone else to occupy the space by taking over the lease. While the lease remains in your name, the person to whom you have sublet occupies the premises and pays the rent on your behalf. However, it is necessary to keep in mind that legally you remain obligated to make the payments so if the person you have sublet the premises defaults in the payment, you will still have a legal obligation.

Assign the Lease to Someone Else

When you assign the lease to someone else, you no longer have the legal obligation for any more lease rentals. However, the landlord is entitled to recover any costs he might incur on the process of approval of the assignee from you. According to law, if you do not get the relevant permission to assign the lease or if there is no response from the landlord in seven days of your request, you can serve a notice for lease termination within 30 days of the original request for assignment.

Lease Termination on Account of Poor Maintenance

If may be possible for you to quit your property lease if the premises have not been properly maintained by the landlord despite your repeated requests. This exit strategy could also work in case the unit suffers from damp and mold or if you have been harassed by the landlord for any reason, however you need to have documentary proof of your claim.

Walking Away From the Lease

If you decide to just walk away from the lease after serving a notice to the landlord, you could potentially be facing a law suit for the pending dues. However, landlords are obligated to try and minimize their damages by renting out the unit again or advertising his intention of renting it out for the balance term. If the landlord does not accept a replacement lessee that you think is a good substitute, then you have good grounds for breaking the lease agreement.

Author bio: Mark Adams is commercial real estate broker with more than a decade of experience. A prolific writer on trends and issues in the property market, many of his articles can be perused by visiting