Breaking a commercial lease on a property
Discussion
A bit of advice please from the general collective. Here's the story.
In August 2011 we rented a workshop on a six year lease with a three year break clause. The break is in
August this year. Now, my understanding was that to activate the break I had to advise the landlord within six months of the due date for the break. It turns out that the lease says I had to advise AT six months, which would have been the end of February, some six weeks ago. I have spoken to the landlord and explained that I wish to exercise the break because I want a bigger property. They have said they will happily activate the break clause, as long as I rent a bigger property from them. But I don't necessarily want to. Their rent is quite expensive per sq metre, and I think I can do better locally. Understandably from my landlord's point of view, they are going to be difficult about the break if I rent somewhere else. There are a lot of empty units in our industrial estate.
I have made an appointment to see my solicitor, but any further advise or pointers would be appreciated. I understand fully, that I'm in the wrong here, but surely I'm not stuck for the next three years?
In August 2011 we rented a workshop on a six year lease with a three year break clause. The break is in
August this year. Now, my understanding was that to activate the break I had to advise the landlord within six months of the due date for the break. It turns out that the lease says I had to advise AT six months, which would have been the end of February, some six weeks ago. I have spoken to the landlord and explained that I wish to exercise the break because I want a bigger property. They have said they will happily activate the break clause, as long as I rent a bigger property from them. But I don't necessarily want to. Their rent is quite expensive per sq metre, and I think I can do better locally. Understandably from my landlord's point of view, they are going to be difficult about the break if I rent somewhere else. There are a lot of empty units in our industrial estate.
I have made an appointment to see my solicitor, but any further advise or pointers would be appreciated. I understand fully, that I'm in the wrong here, but surely I'm not stuck for the next three years?
Some are on the exact date others are not, get your solicitor to read the lease and they will tell you. The obligations of commercial leases are based on the exact wording of each and every lease, so they're all different. If you have missed the date then it'll be down to your negotiating skills with the Landlord to get yourself out of it.
You also need to make sure you're up to date with all the other lease obligations - a breach of your other obligations can invalidate your break notice. Again make sure your solicitor checks.
You also need to make sure you're up to date with all the other lease obligations - a breach of your other obligations can invalidate your break notice. Again make sure your solicitor checks.
I've never seen a lease that allowed a break 'within 6 months' of the break point. That implies anytime up to the break point, I.e. No need to give any notice at all. What would be the point?
On the other hand I have often seen a requirement to give notice at or before 6 months before the break point.
In the current market, the least a landlord deserves is 6 months, it can take easily that time to re-let, if not a lot longer and then the new lease will have a rent free period, most likely.
In any case, as said, it depends what the lease says, but I wouldn't expect any leeway from the landlord.
On the other hand I have often seen a requirement to give notice at or before 6 months before the break point.
In the current market, the least a landlord deserves is 6 months, it can take easily that time to re-let, if not a lot longer and then the new lease will have a rent free period, most likely.
In any case, as said, it depends what the lease says, but I wouldn't expect any leeway from the landlord.
Hoping I can negotiate a six month notice from now (which I would be happy with) but can't see the current landlord giving an inch.
Still, my solicitor is pretty good, so fingers crossed we can negotiate something.
With regards to the six month notice, I didn't mean at any time in the six month up to the break (as you say, no notice) but any time in the six months up to the break, give six months notice.
Still, my solicitor is pretty good, so fingers crossed we can negotiate something.
With regards to the six month notice, I didn't mean at any time in the six month up to the break (as you say, no notice) but any time in the six months up to the break, give six months notice.
Tyre Smoke said:
Hoping I can negotiate a six month notice from now (which I would be happy with) but can't see the current landlord giving an inch.
Still, my solicitor is pretty good, so fingers crossed we can negotiate something.
With regards to the six month notice, I didn't mean at any time in the six month up to the break (as you say, no notice) but any time in the six months up to the break, give six months notice.
I'm afraid the quality of your solicitor will have little impact on the outcome of this as it's pretty black and white. It should take them about 5 minutes to work out if you've missed the break. If you haven't then they can make sure you serve in the correct manner, job done. However, if you have missed it then their involvement pretty much ends there, you are locked into your lease until expiry. The negotiation to remove yourself from that obligation will purely be a financial one, ie, the landlord won't let you off your obligations unless it's financially beneficial to themselves. The 2 options will be you pay them a lump sum premium to surrender the lease and walk away (I guarantee their offer will make you cry, as they will factor in dilapidations, rent payments and Business Rates liability) or you negotiate a new lease on a larger property they own.Still, my solicitor is pretty good, so fingers crossed we can negotiate something.
With regards to the six month notice, I didn't mean at any time in the six month up to the break (as you say, no notice) but any time in the six months up to the break, give six months notice.
JQ said:
I'm afraid the quality of your solicitor will have little impact on the outcome of this as it's pretty black and white. It should take them about 5 minutes to work out if you've missed the break. If you haven't then they can make sure you serve in the correct manner, job done. However, if you have missed it then their involvement pretty much ends there, you are locked into your lease until expiry. The negotiation to remove yourself from that obligation will purely be a financial one, ie, the landlord won't let you off your obligations unless it's financially beneficial to themselves. The 2 options will be you pay them a lump sum premium to surrender the lease and walk away (I guarantee their offer will make you cry, as they will factor in dilapidations, rent payments and Business Rates liability) or you negotiate a new lease on a larger property they own.
This.And then ask why (if it is the case) you ever agreed to a 'hard' break notice date. Usual ones round these here parts are not more than 6 months and not less than 3 months.
Another trick for next time is only ever agree fixed dates in the document i.e. notice to be served no earlier than 25th June 2014 and not later than 24th September 2014 - saves much buggering about.
Tyre Smoke said:
Still, my solicitor is pretty good, so fingers crossed we can negotiate something.
If he's that good what didn't be point the break clause out or negotiate a better one 3 years ago?Tyre Smoke said:
Yep, fully expecting to be shafted.
By your own actions not those of others. Rude-boy said:
his.
And then ask why (if it is the case) you ever agreed to a 'hard' break notice date. Usual ones round these here parts are not more than 6 months and not less than 3 months.
Another trick for next time is only ever agree fixed dates in the document i.e. notice to be served no earlier than 25th June 2014 and not later than 24th September 2014 - saves much buggering about.
Good advice. Morse solicitors should think like this.And then ask why (if it is the case) you ever agreed to a 'hard' break notice date. Usual ones round these here parts are not more than 6 months and not less than 3 months.
Another trick for next time is only ever agree fixed dates in the document i.e. notice to be served no earlier than 25th June 2014 and not later than 24th September 2014 - saves much buggering about.
LoonR1 said:
Tyre Smoke said:
Still, my solicitor is pretty good, so fingers crossed we can negotiate something.
If he's that good what didn't be point the break clause out or negotiate a better one 3 years ago?Tyre Smoke said:
Yep, fully expecting to be shafted.
By your own actions not those of others. The key word above is negotiate. If I'm stuck, then I'm stuck. I was wondering if there was anything a more experienced person in this line of expertise could help with.
Tyre Smoke said:
LoonR1 said:
Tyre Smoke said:
Still, my solicitor is pretty good, so fingers crossed we can negotiate something.
If he's that good what didn't be point the break clause out or negotiate a better one 3 years ago?Tyre Smoke said:
Yep, fully expecting to be shafted.
By your own actions not those of others. The key word above is negotiate. If I'm stuck, then I'm stuck. I was wondering if there was anything a more experienced person in this line of expertise could help with.
Your solicitor is unlikely to have a negotiating position. You can either implement the break or not. I suspect that the offer from your landlord to move into another one of his units will be your best hope - but let's see the clause first.
Tyre Smoke said:
Not quite sure what (cheap) point you are trying to score here, but I fully accept it's my problem, I have never denied it. And secondly, it was a different firm of solicitors that drew up the lease agreement three years ago.
The key word above is negotiate. If I'm stuck, then I'm stuck. I was wondering if there was anything a more experienced person in this line of expertise could help with.
It's not a "cheap" point. Your opportunity to negotiate was when the contract was being drawn up, not now. The key word above is negotiate. If I'm stuck, then I'm stuck. I was wondering if there was anything a more experienced person in this line of expertise could help with.
LoonR1 said:
It's not a "cheap" point. Your opportunity to negotiate was when the contract was being drawn up, not now.
Actually his opportunity to negotiate was also at the point when he could have served a break notice.It is a pretty common error to make when dates are absolute and agreements were entered into years previously. The OP full accepts that point.
Had the commercial letting market been a bit better then he may have had a chance to negotiate anyway. We always try and negotiate ours when we need to, not only when the lease says. I have got out of a few like that, but in the current climate it only works if you are swapping to another unit owned by the same landlord.
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