Commercial Property Leases

By John McCarthy

To future proof against changing circumstances some commercial leases include a break clause which allows flexibility for a landlord or tenant to bring a lease to an early end. However, merely having a right to use a break clause does not mean you can rely on it by simply informing the other side you intend to trigger it.

Careful consideration needs to be given when serving a break notice as to when the break clause can be exercised, who the notice needs to be served on, the wording required for the notice, how it has to be served, what conditions must be complied with, and if any payment is required, the amount and method of the payment.

Failure to comply may cause delays or in a ‘worst case’ scenario lock you into continuing with the lease for years to come.

Accidental mistakes or failing to comply with a condition, even if it makes no commercial or common sense, can lead to the validity of a break notice being successfully challenged. If a party is served with a defective break notice they must take careful actions to avoid arguments that they have waived their right to challenge the validity of the notice. Landlords seeking to exercise a break clause will also need to consider the extra steps required if the lease is not contracted out of the Landlord and Tenant Act 1954.

Given the potential difficulties landlords and tenants can encounter they should regularly review their property portfolio leases to ensure no critical date is missed and consider the timetable to implement their plans, and whether assistance is required from professional advisors.

Break clauses can provide a valuable opportunity to deal with changing business needs, but care is needed. For further advice please contact John McCarthy on 01722 410664 or by email at This email address is being protected from spambots. You need JavaScript enabled to view it.

John McCarthy