There are many reasons why commercial tenants and landlords may want to end a commercial tenancy early.

Perhaps a tenant is finding the lease too much of a financial burden, or the premises are no longer suitable for achieving business objectives. A landlord may have new ideas for the property and want to redevelop or let to a more “suitable” tenant.

A commercial lease may contain a break clause (also called a break option) allowing a tenant and/or a landlord to end the lease early in certain circumstances.

The party on the receiving end is unlikely to want a break notice to take effect. A landlord will have to find a new commercial tenant and a tenant will have to find new premises to operate from – both are time consuming and expensive exercises. As such, break notices can often act as a flashpoint for disputes between landlords and tenants.

It is also imperative that break notices are drafted correctly as any defects can render them invalid, with potentially expensive consequences.

Luscombe Gray can provide expert advice to landlords and tenants in relation to break notices, including drafting and serving the notice and advising on the validity of any notice received. We specialise in commercial property disputes and landlord/tenant disputes, providing clear and commercially-focused advice.

If you would like to discuss how Luscombe Gray can help your business, please do not hesitate to contact us.

Exercising a break notice

A break clause in a lease can act as a useful safety mechanism for a tenant when taking on a commercial tenancy. If it becomes apparent that your business cannot support the tenancy, the break clause may allow you to end the tenancy early and avoid a significant financial liability.

A break clause is also a useful tool for a commercial landlord who wants to recover possession for a particular purpose, such as redeveloping, selling with vacant possession or installing a better quality tenant.

However, the break clause in a lease may have conditions attached for a break notice to take effect. For example, some break clauses may specify that a tenant must have abided by all lease covenants or that a landlord must be able to demonstrate a settled intention to redevelop. If these conditions are not satisfied then the break notice will not take effect and the lease will continue.

Seeking legal advice before serving a break notice is critical. The terms of such clauses are often strictly construed by the courts, meaning even apparently minor infractions could prevent the break notice from taking effect.

Even the methods by which a break notice must be served have to be strictly adhered to. This can include details such as: where notice must be sent, when it becomes possible to send it, and by what means.

A landlord will also have to consider the implications of exercising a break notice where the lease is protected by the Landlord and Tenant Act 1954.

All terms of the break clause should be thoroughly scrutinised to ensure you are fully aware of the consequences of exercising the break option. Specialist guidance from an expert commercial property dispute solicitor will prove invaluable in doing so.

Disputing a break notice

The lease terms will usually deal with your rights in relation to any break clause. Some of these terms may allow you the right to refuse acceptance of a break notice, depending on the circumstances.

However, you should seek specialist legal advice before communicating with the party who served the break notice. Certain conduct in relation to the break notice may cause you to inadvertently waive your right to contest it. Luscombe Gray can advise you fully as to how you may proceed without compromising your legal position.

Withdrawing a break notice

Both parties should be aware that a break notice cannot be withdrawn. The law may treat the withdrawal of a break notice as a surrender of the original lease, effectively implementing a new lease on identical terms in its place.

This can lead to many unwanted legal consequences. For example, the new implied lease will not automatically be ‘contracted out’ of the security of tenure provisions within the Landlord and Tenant Act 1954. For a landlord, you may not wish to confer these rights, which gives tenants a strong position when a tenancy ends, allowing them to insist upon its renewal.

With so many potential pitfalls in break notice disputes, legal advice from a solicitor specialising in commercial property matters is vital for ensuring the best possible outcome for your business.

Instructing Luscombe Gray

Luscombe Gray is a boutique property litigation firm, providing a legal service tailored to the needs of our clients. We believe first-class legal advice should be available to all.

If you need legal support for a dispute concerning a break notice, contact Luscombe Gray for clear and expert advice. Your case will be handled by an experienced property litigation solicitor.

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