| Getting out of a commercial lease can be a difficult | | | | on your situation, you may consider continuing to pay |
| and often daunting process but depending on your | | | | rent until a new tenant appears; even though you are |
| individual circumstances or real estate market you are | | | | no longer residing in the space. |
| in, you may be able to negotiate a compromise with | | | | Most landlords will want to negotiate the terms of an |
| your landlord. | | | | early termination, buyout, assignment or sublease of |
| During a downturn, recession or financial crisis, | | | | the space. The new sublease may be required to be |
| companies find they have more space than they need. | | | | approved by the landlord and must not extend beyond |
| This can be due to lay-offs or perhaps part of the | | | | the rights you have in the master lease, so you can't |
| business moving to another location, or because the | | | | add space, subtract or partition a section of your |
| business has not developed as much as they'd hoped. | | | | space or increase or reduce the length of the lease |
| In the worst case, some companies need to close | | | | without your landlord's permission. Again, in the instance |
| down altogether. | | | | you have identified a tenant to sublease or assign the |
| If you're in a position where you have too much space, | | | | lease, it is always best to seek the advice of a local |
| then you may be able to terminate the lease early, | | | | tenant advisor or real estate attorney to negotiate the |
| sublet, assign or buyout of your lease obligation. There | | | | terms of the sublease or assignment of the lease. |
| may also be an option to move out of the premises | | | | It may be feasible to get entirely out of your lease. The |
| completely. Always check with your landlord before | | | | shorter the period of lease term you have, the more |
| sub-letting. Remember, you will be liable to your landlord | | | | likely this is. Your chances will also increase if the |
| to pay rent for the remaining term of the lease and | | | | building is full. This is because the landlord should be |
| this may be more of a hassle than it is worth. | | | | able to find a new tenant quickly, and may even be |
| Step 1 | | | | able to increase the rent as a result. |
| Examine your lease for an early termination paragraph. | | | | When approaching your landlord be careful how you |
| Most commercial leases give specific terms as to the | | | | go about presenting your case. If you let them see that |
| conditions you can exit the lease without penalty. If | | | | you are desperate to move or find out you are going |
| your circumstance doesn't qualify under the | | | | out of business, you may end up paying a premium to |
| acceptable early termination terms of the lease, you | | | | get out of your lease. Again, it is always best to hire a |
| can expect to face the financial penalties described in | | | | local tenant advisor or tenant representative in this |
| the contract when you break the lease. This may | | | | case because they can plead your case without |
| include legal fees, sublease / assignment fees and | | | | getting you personally involved. |
| payment of all or a portion of remaining rent. | | | | If you can find another tenant to take over the lease |
| Step 2 | | | | completely, you are likely to have a much stronger |
| Talk to your landlord informally about the lease | | | | case. Remember, the landlord is likely to want to see |
| agreement. Test the waters with your landlord in a | | | | the prospective tenants' audited financials, bank |
| friendly conversation to find out how receptive he is to | | | | account statements and references. |
| simply terminating the lease. It never hurts to ask. The | | | | When assigning the lease to another business, the |
| landlord may already have someone interested in your | | | | new tenant becomes directly liable to the landlord, but |
| space. | | | | you may still have some accountability. The landlord will |
| Step 3 | | | | usually require you to guarantee the payments of the |
| Offer a buyout to end the lease. Even if your landlord | | | | next tenant, but not all tenants agree to this stipulation. |
| is unwilling to terminate voluntarily, he may be more | | | | Again, it is always best to seek the advice of a |
| cooperative if he has a financial incentive. May want to | | | | professional to advise you of your rights. |
| offer to cover the landlord for the time it takes him to | | | | In any case, it is not likely that you will get out of your |
| find another tenant to rent the space. Word of caution, | | | | lease without some penalty. You may be liable for the |
| if the landlord finds a lower paying tenant, your | | | | landlord's attorney's fees, the remaining rent oblation |
| business can be liable for the difference in rent until the | | | | and you may also be liable for meeting your landlord's |
| original lease expiration. | | | | expenses such as the improvements and commission |
| Step 4 | | | | paid to the broker on the space. |
| Take your lease agreement to a local tenant advisor, | | | | All things considered, you may find yourself better |
| tenant representative or real estate attorney if your | | | | subletting the space and making other arrangements |
| landlord refuses to negotiate to end to the lease. | | | | such as renting less office space nearby to |
| Although you can break a commercial lease without a | | | | accommodate the reduction in space. |
| lawyer, seeking local tenant advisor, tenant | | | | If and when you do get out of your lease, there are |
| representative or legal representation ensures both | | | | things to bear in mind when negotiating a new lease. |
| you and your landlord stay within your legal boundaries | | | | It's always best to hire a professional real estate |
| during the process. | | | | tenant advisor to negotiate on your behalf to provide |
| Step 5 | | | | you as much flexibility in your next lease. For example, |
| Obtain the assistance of a tenant advisor or tenant | | | | you could ask the broker to negotiate a break clause |
| representative to help you identify a tenant to | | | | at various stages in the lease to allow you to |
| sublease or assign the space for the remaining term | | | | terminate the agreement early. |
| of the lease or assign the lease to another entity to | | | | Remember, contracts are binding by law. If your |
| fulfill your lease obligation. While you are working with a | | | | landlord refuses to accommodating, you will have little |
| professional to identify a tenant, your landlord may be | | | | choice but to stay in your premises until the end of the |
| able to assist identify a new tenant, as well. Depending | | | | lease obligation. |