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Can you terminate your commercial lease due to hardship?

On Behalf of | Jul 29, 2021 | Property Law

Leases should protect everyone who signs them. Tenants have the protection of locking in a specific space for their needs and a specific rental rate. Landlords have the protection of knowing someone has to pay them for a specific amount of time so that they can budget based on that income. 

Commercial leases, unlike residential ones, usually last for multiple years. If your business runs into hardship before the end of the lease, will you be able to terminate your lease and avoid the financial complications of unpaid rent for a commercial unit you can’t use?

Is the landlord willing to work with you? 

Perhaps the most straightforward way to terminate a commercial lease, regardless of how long until the end of the lease, is through an agreement with the landlord. They might agree to absolve you of your financial responsibilities with someone else takes over the lease or even as soon as you vacate the property. However, if they don’t want to work with you, then looking at your lease could give you another option.

Does your lease include a force majeure clause?

Force majeure is a legal term that refers to a situation outside of the control of the people involved. In a commercial lease, this clause allows a tenant to terminate the lease early in specific situations. If an act of terrorism, a natural disaster or other circumstances that you couldn’t predict or control force you to cease business operations, the force majeure clause in your lease gives you the opportunity to terminate the lease without as many financial repercussions. 

Negotiating the end of a commercial lease before it is actually over can be just as difficult as trying to get good terms when you first sign the lease. Knowing what options you have can help you resolve issues with your commercial lease.