My lease has come to an end, … hasn’t it?

In these times of economic uncertainty everyone in business is looking at ways of reducing their costs. If you are a business tenant, reviewing your property requirements is often an obvious starting point.

So you check your lease and see that there is a clause allowing you to bring your lease to an end early by serving a break notice and that the date for serving the notice is coming up shortly. You decide it would be in the best interest of the business to take advantage of this. You have plenty of time to serve a notice and the lease tells you what you must and must not do to get it right. It all looks pretty straightforward so you ask your in-house property administrator to get the notice off to the landlord.

Confident that all is well you make plans to leave the building and maybe even sign up to relocate. Your rent is up to date and you are going to make sure you leave the property in good repair when you go.

Out of the blue the landlord refuses to accept that the lease has come to an end on the break date. It turns out your notice is defective or you have not complied fully with the pre-conditions in the lease for the valid operation of your break notice and it is too late to put things right. Your lease is not going to end after all.

We have seen many cases of tenants getting what appears to be a relatively simple process wrong because the law relating to the preparation and service of break clauses and compliance with pre-conditions is so strict. In a recent case, Avocet Industrial Estates LLP -v- Merol, the tenant’s failure to pay £130 of interest arising out of the late payment of rent under its lease was enough to mean its break notice was ineffective, leaving it liable for 5 more years of rent, service charges and other costs.

The consequences of getting a break notice wrong can often be financially very serious – you may have tried to break a 25 year lease at year 10 and suddenly have another 15 years to go. In a weak letting market, landlords do not want to lose income from existing tenants, so many are unlikely to waive their strict contractual entitlements to continue treating a lease as continuing when a break notice has been incorrectly prepared or served.

You might think it is not worth asking a lawyer to review your lease or to serve the break notice for you. However, we know what the potential pitfalls are and we know how to avoid them. Using us could save you a substantial amount of money in rent, service charges and insurance premiums. Money well spent.

Please give me, Karen Chapman, Partner in Druces LLP’s Property team or Julian Johnstone, Partner in Druces LLP’s Litigation & Dispute Resolution team a call if you would like us to help you draft and serve your break notice and advise you as to your lease obligations generally. We can also help you if you are relocating to new premises

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