Commercial leases typically require a multi-year commitment from the business tenant. Many commercial leases last two years or longer. In fact, the commercial leases that persist for five or even 10 years are common.
New companies and expanding businesses sometimes sign leases for spaces that don’t suit their needs. Other times, companies that have lease obligations fail or need to restructure. In those situations, organizations may hope to terminate a commercial lease before the lease technically ends.
Is it possible for a commercial tenant to end a business lease before the rental period technically ends?
Lease terms influence the tenant’s options
There are several options available for commercial tenants that can no longer continue paying rent or that need different facilities. In some cases, landlords with facilities in high-demand locations may agree to terminate the lease early, possibly after receiving a partial payment of the remainder of the rent owed by the tenant.
Other times, tenants may be able to assign the lease to another business. The original lease documents may include clauses permitting lease assignment in specific scenarios or outright forbidding the assignment of a lease to an outside party.
In scenarios where the circumstances affecting the company are outside of the business’s control, a force majeure clause might allow for the penalty-free cancellation of the lease. In some cases, business bankruptcy proceedings can lay the necessary groundwork to allow commercial tenants to terminate a lease before it technically ends.
Reviewing a commercial lease can help a tenant determine the best solution for a lease that no longer meets the company’s needs. Commercial tenants seeking to end leases early often need assistance communicating with their landlords and negotiating reasonable solutions given the terms included in the initial lease.
