Business owners in California and throughout the country may encounter a situation that requires them to break their commercial lease. For some, it is because their companies have outgrown their current locations. To make it easier to get out of a lease, an out clause should be negotiated into the document before it is signed. It can also be a good idea to negotiate a shorter lease period to account for fast growth.
If an out clause or similar language isn’t included in a lease, it doesn’t mean that the agreement can’t be terminated early. Instead, it means that a business owner will need to ask his or her landlord for permission to leave. To increase the odds of a landlord agreeing to end a lease early, it may be wise to help find a new tenant or use cash to buy out the rest of the lease’s term.
Alternatively, a company could just leave without making any future rent payments. While that could lead to a lawsuit, a landlord has to at least look for a new tenant after the most current one leaves. Therefore, it could limit any damages that a company is ultimately asked or required to pay. However, this should be seen as a last resort after negotiations and other options have been exhausted.
Those who are looking to break a commercial real estate lease may find it beneficial to consult with an attorney. An attorney may review the deal and look for any language in it that could make it easier for a company to get out of the deal. If necessary, this person may negotiate a new deal or negotiate the terms of an exit from that contract. This may allow a business to move to a new location in a timely manner.
