How can you avoid or minimize penalties for breaking your commercial lease early?

1 Review your lease agreement

The first step to terminating your commercial lease early is to review your lease agreement carefully. Look for any clauses that may give you the right to end your lease early, such as a break clause, a force majeure clause, or a co-tenancy clause. These clauses may allow you to terminate your lease without penalty or with reduced fees under certain circumstances, such as a change in market conditions, a natural disaster, or a loss of a major tenant in the same building. However, these clauses may also have specific conditions and limitations, so make sure you understand them fully before invoking them.

2 Negotiate with your landlord

If your lease agreement does not have any clauses that allow you to terminate your lease early, or if you do not meet the requirements for them, you may still be able to negotiate with your landlord. Explain your situation and reasons for wanting to end your lease early, and propose a solution that benefits both parties. For example, you may offer to pay a portion of the remaining rent, or to help find a new tenant to take over your lease. Your landlord may be willing to accept your offer, especially if they are facing a high vacancy rate or a difficult market. However, be prepared to face some resistance or rejection from your landlord, and always get any agreement in writing.

6 Prepare for the exit

Once you have reached an agreement with your landlord or found a new tenant to take over your lease, you should prepare for the exit. This means complying with any terms and conditions of your lease agreement, such as paying any outstanding rent or fees, repairing any damages, and returning the premises in a clean and orderly condition. You should also notify your customers, employees, and suppliers of your move, and update your contact information and address. Finally, you should document the condition of the premises and the inventory of any fixtures or equipment, and obtain a written confirmation from your landlord that you have fulfilled all your obligations and terminated your lease successfully.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?