4 Ways to Negotiate an Early Exit from a Commercial Lease Agreement
Graphical representation of a woman in a commercial lease agreement. Image source: vedmochka.net

As a tenant, you might sometimes find yourself in situations where you would want to terminate a commercial lease.

Your business might have not done well or you might have found a better deal closer to customers or clients. Whatever may be the reason, if you want to change your business location without the current lease getting exhausted, you might end up thinking of ways to could get out of it early. Four legal options to do this are shared in this post:

1Prepare an exit strategy

Your plan of getting out of commercial lease should start before signing the lease itself. You should consider what would be your strategy in case of an “early exit”. It would be extremely convenient if you have pre-arranged terms for leaving early in your commercial lease, which would mean that you insert an exit clause in it. Provisions relating to income projections in a lease can allow for a possibility of early exit. However it would be a smart option for you to consider getting into shorter lease terms which could then be extended on your convenience. This would also ensure more flexibility in the duration of the lease.

2Amend the terms of the existing lease

For this option, you’d have to know If you do not have an “early exit” option you have an option to negotiate with your landlord and negotiate with them to rewrite the terms of the lease which could allow you to exist before the stipulated time. However your landlord is not obligated to agree to this rewriting of terms but it does account for a showcase of good faith that could ensure a more amicable exit.


Your last solution to this dilemma of getting out of a commercial lease early would be to simply exit. In majority of cases, there will be a duty imposed on landlord to mitigate damages which would mean that you cannot be forced to keep paying the rent on a property you no longer apply, while he/she looks for a new tenant. Additionally the landlord cannot ask you and the new tenant to pay rent on the same space. While it is true that your landlord can sue you for unpaid future rent but this duty imposed on them could reduce your losses.

In a scenario where the new tenant ends up paying lesser than you did, your landlord might claim that you owe them the difference over the term of lease and you could be forced to get paid. If in case your landlord refuses to find a new tenant because you’re still liable on the lease, you should try to locate a new tenant yourself to assume the lease obligations. To make sure this happens your lease should contain a clause that says that your landlord cannot unreasonably refuse to take in a new tenant.

4Buy-out option

This option essentially means that you could offer monetary compensation to your landlord for letting you out of your lease, which could include letting them keep a part or all of your security deposit. Moreover if the space let out to you can be easily re-let without much trouble, then your landlord may agree to let you out of the lease in exchange for certain consideration.

For further information on how to exit a commercial lease prior to the date agreed upon in it, it would also be useful for you to get your lease reviewed by an experienced commercial attorney.

Originally posted 2017-08-08 21:45:47.


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