What Happens If You Break A Lease Early?

People sometimes come to me when they are a tenant under a commercial or retail Lease and have decided to leave early for for whatever reason. Perhaps they cannot afford the rent or some other premises might better suit their business. What happens then?

In such a case the landlord will be entitled to terminate the Lease and recover his losses arising from the breach which will include the remaining rent for the Lease, the cost of finding a new tenant being the agent’s commission and advertising expenses and the landlord’s lawyer’s fees for dealing with the breach and preparing a new Lease.

However, the landlord is also under a legal obligation to mitigate his losses.This means he must take reasonable steps to reduce his losses by actively seeking to find a new tenant and ensuring that the new rent is not unreasonable. Even if the best rent obtainable is lower than before then he must accept it in order to minimise his loss.

What I have done in such situations is to negotiate a settlement with the landlord allowing the tenant to leave for an agreed sum without any further liability to the landlord. In that way both parties can get on with their lives without the intervention of a Court or Tribunal.

January 2019