Can Your Commercial Tenant Break Its Lease Early?

If your commercial tenant says it needs less space and wants to terminate its lease early, don’t assume you have to agree. The tenant’s rights (and your options as the landlord) will depend largely on the terms of the commercial lease.

The first step is to review the lease. A tenant generally cannot terminate a commercial lease simply because its business needs have changed. The lease may contain an early termination provision, or it may give the tenant rights to assign or sublease the space.

If the lease does not provide an automatic early termination right, the parties can negotiate a solution. The tenant may agree to pay a termination fee, continue paying rent until a replacement tenant is found, or surrender part of the premises if the space can be divided.

As always, any early termination agreement should be in writing. This agreement should clearly state the termination date, detail any payments owed, address the condition of the premises, and itemize any continuing obligations of the tenant.

Every lease is different. So if your commercial tenant is asking to terminate its lease early, contact our office to discuss your options today. With the right approach, a landlord can protect its interests while preventing a dispute.