Breaking a commercial lease in California

On Behalf of | Nov 29, 2017 | Commercial Real Estate |

Business owners in California and around the country sometimes find themselves committed to commercial lease agreements that no longer fit their needs. Entrepreneurs may wish to break their leases because their businesses have grown and need more space, or they may be seeking an exit due to an unexpected downturn and a pressing need to reduce costs. Breaking a commercial lease can be straightforward or difficult based on the landlord involved, the market conditions and the state of the economy.

Commercial property landlords could be willing to terminate lease agreements early when the economy is thriving and the demand for space is fierce, but they may act more belligerently when finding a new tenant could be difficult. However, leases may still be terminated early in these situations as long as landlords feel that they are being adequately compensated. Landlords may be more willing to negotiate when tenants who wish to break their leases have made improvements to the property or offer to help find a replacement tenant.

When landlords are unwilling to negotiate, tenants can simply abandon the rental property and face the consequences. Business owners should only take this step as a last resort as they will likely remain responsible for any unpaid rent until another tenant is found. However, simply threatening to vacate the premises may sometimes be enough to encourage commercial real estate landlords to reconsider their options.

Attorneys with experience in this area may urge business owners to consider their future plans carefully when choosing a location and negotiating a lease. Attorneys could recommend shorter leases for businesses that are new or expanding into an unknown sector, and they may also suggest incorporating exit clauses that make the rights and responsibilities of landlords and tenants clear in these situations. When landlords and tenants become embroiled in lease disputes, attorneys may remind the parties involved about the unpredictability of court proceedings and encourage them to settle their differences at the negotiating table.

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