Break clauses in leases are now very much a fact of life says commercial property agent Prop-Search. They first began to appear in large numbers in the early 1990s when tenants were not prepared to enter into long term commitments and this has now more or less become the norm.
Break clauses allow tenants to take longer leases but limit their liability by allowing them to walk away from the lease at a specific date in the future. However, failure to act in time of the notice dates has left many tenants with leases they do not want and continuing obligations they would have sooner avoided.
Ian Harman, a Director of Prop-Search, says: “We are coming across more and more cases where tenants are being prevented from implementing their break clauses. Too often the time limits, which are critical, are being missed.”
“Furthermore, it is not uncommon to find requirements that all covenants in the lease are complied with prior to the operation of the break. Accordingly, failure to maintain or repair, for example, may prevent a tenant from walking away from a lease.”
Tenants that have break clauses looming are, therefore, advised to thoroughly check their leases well in advance of the break date and ensure that all conditions in relation to the clause are complied with. It is advisable for tenants to take professional advice in this area to ensure that opportunities are not missed purely on technical grounds.
