Due to Covid19, many landlords are receiving break notices from their commercial property tenants. Break notices, also known as break clauses or break options, often allow a landlord or tenant to bring a lease to an early end. Landlords who receive such a notice should ensure their tenant has followed the correct procedure, otherwise the break notice may be invalid. Similarly, tenants should be careful to correctly serve a break notice, otherwise it could lead to them being unable to exercise an early termination.
What should I do as a tenant to make sure I serve the break notice correctly?
Firstly, you need to check the wording in your lease for your right to serve a break notice. TP Legal would be happy to assist you in determining your eligibility.
All that is usually required from you as the tenant is a notice to the landlord stating that you intend to exercise the right to break the lease in accordance with the lease terms. It is extremely important that you check who is named as the landlord under the lease, and who is registered at the Land Registry as the landlord. If notice is not served on the correct landlord, then this will make the notice invalid. The notice should be served in duplicate and the landlord should be asked to sign and return one copy as acknowledgment of receipt.
Although this process appears relatively simple it can be controversial, and the courts are frequently asked to clarify the validity of a break notice.
Often a tenant can only break a lease on a stated date, for example on the 3rd or 5th anniversary of the term, and therefore failure to serve a valid notice in time can have drastic consequences. If you miss your break date, there may be no further opportunity to break and you will be bound by the lease until the end of the term. You must therefore pay extra care when considering the break clause and ensure you serve it at the correct time.
As a tenant, you should also be mindful of the break conditions - for example, in many cases break notices will only be valid upon giving up vacant possession of the property and if there is no outstanding rent. In some cases, there may be additional conditions which must be met. TP Legal would be happy to consider the terms of your break clause to determine what conditions you must comply with before serving your break notice.
What should I do as a landlord if I receive a break notice?
As a landlord you will want to check the notice has been served in accordance with the terms of the lease and on the relevant dates and times specified by the lease. You should also check the notice has been delivered correctly – eg. by hand or by post, if specified in the lease. You will also want to ensure that the conditions of the lease, such as any repairing obligations, have been complied with before the tenant vacates the property.
If you are satisfied the notice has been served correctly then it would be wise to consider your next steps. If you would like TP Legal to check what obligations the tenant has prior to vacating the premises, we would be happy to discuss this with you along with any options you may have.
This article is intended for information purposes only and not as a substitute for legal advice. TP Legal does not accept any responsibility for any decisions that you may make as a result of reading this article.
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