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Update for Commercial Tenants

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A High Court decision provides a helpful reminder for commercial tenants of the need to fully comply with any conditions for exercising a right to break the lease. Otherwise, as in this case, the lease will continue to exist and the tenant may have lost their one and only opportunity to break the lease. Tenants should check carefully the terms of their lease and any licence for alterations.

In this case, when the lease was granted, the premises were open plan. The tenant subsequently carried out various works, including the installation of partitions to divide the open space layout. 

The court held that the partitions were chattels that substantially prevented or interfered with the landlord's right of possession and should have been removed prior to the break date. The tenant’s failure to do so meant that the tenant had failed give vacant possession which was one of the conditions to the break provision.

The tenant lost its right to break the lease through its failure to remove the partitioning and thus provide vacant possession.

Break clauses come in all shapes and sizes and it is rarely simply a case of giving the required period of notice. Tenants should first of all diarise for 3 to 6 months before the date that notice is required to be given ahead of the break date to consider the option to break and to be clear as to the terms and conditions of the break and, if necessary , to take advice at this early stage. With the decision made, the notice can be given and served as required by the lease and a plan made to ensure compliance with the terms of the break.

Contact Abigail Mitchell, Head of Commercial Property, for more information on 01904 624185 or advice on all aspects of commercial property.