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Business can change quickly. When the change happens at a large enough scale, you may need to exit a commercial lease before the lease end date. How you approach the process of exiting a lease early impacts the exiting successfully. Underlying all elements of the approach is to be fair in your dealings.
Getting out of a commercial property lease early, and surrendering the commercial property can be complex, but here are the general steps you might follow for an early lease exit that is beneficial for your company and for the lessor:
1. Review the Lease Agreement
Start by carefully reviewing your lease agreement. Pay close attention to the termination clauses, such as early termination fees, notice requirements, and any provisions for breaking the lease early.
2. Communicate with the Landlord
Open communication with your landlord is essential. Inform them of your intention to terminate the lease early and discuss possible options. They may be willing to negotiate terms or find a new tenant to take over the lease. The more lead time you provide to the landlord, the more options will be available to mitigate the impact of the early lease termination.
3. Negotiate
Try to negotiate with the landlord for an early termination. Offer to find a replacement tenant or pay a fee to terminate the lease early. Be prepared to compromise and be flexible during negotiations.
4. Find a Replacement Tenant
Many commercial leases allow for subleasing or assignment of the lease to a new tenant. If your lease agreement permits, actively search for a replacement tenant who can take over the lease. Ensure you follow the procedures outlined in your lease for assigning or subleasing the property. Remember that you are still responsible for fulfilling your obligations to the lessor while it is sublet.
5. Consider Legal Options
If negotiations with the landlord are unsuccessful, consider consulting with a lawyer specializing in commercial real estate law. They can provide information on your options for early lease termination and your legal rights. Unfortunately, in some cases, it may take the involvement of a lawyer to motivate the lessor to the negotiating table.
6. Document Everything
Maintain detailed records of all correspondence with the landlord about early lease termination. This includes written correspondence, emails, and any agreements reached during negotiations. Documentation and contemporaneous notes will help protect your interests in any disputes.
7. Pay any Fees or Penalties
If your lease agreement requires it, prepare to pay the early termination penalties or fees outlined in the contract. Make sure to fulfill any financial obligations to the landlord before vacating the property.
8. Vacate the Property
Once you have agreed with the landlord or fulfilled any contractual obligations, vacate the property according to the terms outlined in your lease agreement. Make sure to leave the premises in good condition to avoid additional charges or disputes with the landlord.
Remember that each commercial lease agreement is different, so it's important to carefully review the terms of your lease and seek professional advice if needed.
Chipman Relocation & Logistics provides Commercial Lease Surrender Services if you are moving out of a commercial property. Contact us to learn more, or click here.
