Break clauses – drafting new ones and operating old ones – are still a hot topic for property professionals as individuals and companies look to get out of property they no longer want, or can no longer afford.
A tenant’s need to get out of property because of downsizing, downshifting or just trying to stay solvent will more often than not be equally matched by a landlord’s desire to keep the tenant tied to terms that might have been agreed in the boom years, but which no one else would be willing or able to sign up to today.
If you are a tenant, when you operate your break clause, you have to get it right because time after time the courts have shown themselves unwilling to bend over backwards to rescue a tenant from the consequences of a mistake that on the face of it appears to be a mere technicality, but which can result in the tenant not being able to escape its lease for the duration of the term.
Getting it wrong can be the most expensive mistake a tenant can make.
I have posted several times on this blog about break clauses, but as the topic remains as relevant now as it ever was, it might be useful for you to have a strategic reminder and links to the relevant posts.
For the most common mistakes made by tenants operating break clauses and examples of the conditions that sometimes have to be complied with, see What Can Possibly Go Wrong?
It is vital to ensure a break notice is served on the right person, and if you are a landlord that your managing agents respond in the right way (or better still, don't respond), see Don’t Get Caught in the Landlord’s Web.
If you do get it wrong, there might still be time to remedy the situation, see If You Get it Wrong, You’ll Get it Right Next Time.
And whatever you do, make sure you get your own name right, see Get Your Own Name Right!
The break right might be personal to the original tenant only, and so of no use to subsequent tenants, see This Time it’s Personal!
You might be obliged to give “vacant possession” as a condition of breaking the lease; for a discussion of what that means see Pretty Vacant.
Then again, you might serve the notice and get everything right, but then you change your mind and want to stay at the premises after all. What then? See What If You Change Your Mind?
And if you’re negotiating a new lease, you will want a simple and effective break clause without any onerous conditions, see What Should You Agree in a New Lease?
There are special considerations to think about if you want to have the ability to get out of only part of your premises, see Want an Option to Quit Part of Your Premises? Why Does the Law Get in the Way?
It’s not just tenants who want break clauses, landlords do too sometimes.
How can break clauses be effective for landlords? See When is a Landlord’s Break Clause Effective?
For a more complicated example of how a break clause can go wrong for a landlord, where there are issues of “estoppel” and renewal rights, see More Food for Thought For Landlords.
Given the times we live in, I suspect there will be many more tales of break clause bungling in the months to come.
I’ll try to keep you posted.
Always take professional advice as soon as possible if you are going to operate a break clause or if you are negotiating a new one.