Termination of a Lease – Break Clauses

If a tenant wishes to bring a lease to a premature end, one option is to exercise a break clause which is often contained in both commercial and residential leases. Here’s some guidance on for landlords on break clauses.  

While there are a number of ways to bring a lease to an end and plenty of reasons, a brake clause provides tenants with the option to terminate a lease as long as certain conditions are followed in the terms of the lease where it applies. Whether it applies of course will depend on whether the break clause appears in the first place. A break clause cannot be applied unless it is included in the lease.  

Break clauses are commonly included on a rolling basis or on a specified date. To exercise a break clause, a tenant must give sufficient notice to the landlord in both cases otherwise a landlord can dispute the application. If the tenant fails to provide enough notice in the case of a fixed date break clause, then the break clause will expire.  

Other potential reasons that may affect the rights of a tenant to exercise a break clause include failing to keep up with rent payments, breach of covenants.

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