Taylor Fordyce Articles

Commercial Tenants - breaking up can be so very hard to do!

August 2012

In these hard times, you can at least take comfort that when you took the lease you wisely insisted on a tenant’s break clause to allow you to shorten the lease if things do not go according to plan. Just picture it – your landlord in tears as he waves goodbye to the best tenant he ever had, as you move on to something smaller or bigger. Or better still, he begs you to stay and offers to halve the rent just to keep you.

But you better just have another look at that lease just to check the position: 

What break date is it? 

What notice is required?

How is the notice to be given?

Are there conditions, are they binding?

The smallest error can be a big mistake

Why? Because in the eyes of the law, a break clause is an option right and you must strictly comply with time limits and conditions.

Like what? Well, for example: “On 25 December by giving at least 6 months written notice before that date” means giving no less than 6 months notice before 25 December. So posting the notice on 25 June would not be soon enough. If posting is valid service, it is better giving no less than 7 months notice.

Notice by post. This can be tricky. If the lease says by recorded delivery then first class post, or even personal delivery, will not be valid. And where to? If the landlord is a company it is usually the registered office not the place of business. The wrong address would be fatal.

If the lease says “Subject to performance of all the tenant’s covenants in the lease”. Well, you might have to abandon the idea completely. Take repair, for example - when did you last inspect the roof, and the drains?

Wrong colour paper? – YOU CANNOT BE SERIOUS!!

Lord Hoffmann was, in a 1997 case, when he stated "if the [notice] clause had said that the notice had to be on blue paper, it would have been no good serving a notice on pink paper, however clear it might have been that the tenant wanted to terminate the lease."

There have been many cases on this subject, with almost endless arguments on whether notices have been valid or not. The most recent required the tenant to pay a full quarters rent on 30 September, even though the lease would have been ended on 11 October. The tenant didn’t, the lease continued.

So if you want to take advantage of a break clause, get it checked out in good time.