A tenant usually cannot terminate a commercial lease before the lease term is over without facing liability, unless the lease allows for early termination. Commercial leases usually last for a fixed period of time, such as five or ten years. In a commercial fixed term lease, tenants are bound by the lease until the lease ends, even if the business fails or if the premises are vacated.
If a commercial lease is terminated before the end of the lease term, the non-breaching party, i.e. the person that did not terminate the lease early, can seek money damages for the breach. Such damages are often very difficult to measure and leases often stipulate that the person who breached pay liquidated damages, which is an agreed upon flat sum of money.
The lease may also contain an acceleration clause, which requires that the breaching party fully perform the contract, meaning that the entire amount of rent for the full term of the lease will become due once the tenant terminates his or her lease early. Many leases also provide that in a dispute the winning party will be awarded attorney's fees.
You can only terminate a commercial lease before the lease term is over without liability only if there is a provision in the lease that allows for early termination. The most common clauses in a commercial lease that allow for early termination without liability are as follows:
Commercial real estate law is complex, differs by jurisdiction, and varies depending on the terms of the lease. A real estate attorney can ensure that your interests are well represented when you negotiate a commercial lease. A real estate attorney can also provide assistance and legal guidance concerning the right to terminate a commercial lease before the lease term expires.
Last Modified: 02-27-2018 12:27 AM PSTLaw Library Disclaimer
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