Exercising a break clause to quit your premises may not be as straight forward as you suppose.
By Keith Miller of thePublican.com's team of legal experts from London solicitors Joelson Wilson.
If your lease is getting you down and you are looking for a way out, you may find that it contains a tenant's break clause. This provision gives the tenant the right to bring the lease to an end before the usual expiry date. This may be possible to exercise on a specified date - once missed, too late - or it may be what is called a "rolling break", which can be exercised either throughout the lease or after a particular date.
Preferably, get your solicitor to check your lease for advice on how and when to serve the notice to exercise the break option. Case reports are full of claims with incorrect notices. Although there is a rule that a minor error does not invalidate a notice if the person receiving it ought to know what the notice actually means, the consequences of serving an invalid notice are not worth risking. Not least, you may have to stay in the premises for the rest of the term of the lease - and may have to face any rent increases.
Expiry date
Your solicitor will advise you on what you need to do after serving the correct notice to ensure you have the right to leave on the expiry date. The break clauses in many old leases contain preconditions which, if not complied with, will prevent the break becoming effective. Typically, the suspect words will provide that the tenant must pay the rent and perform the covenants in the lease right up to the date when the notice expires. Be aware that:
- "Pay the rent" means, for example, paying the full quarter's rent before the expiry date, even though there are only a few days or weeks to run, unless the lease says otherwise and provides for a refund. This may mean gifting several weeks' rent to the landlord.
- "Perform the covenants" means performing and observing all covenants. A landlord's favourite is to claim that the premises have not been repaired or decorated - any small default will do. Another is to say that the tenant's alterations have not been removed. Most leases have a clause stating that the premises must be handed back in good condition and with all additions removed and alterations reinstated.
- Giving vacant possession on the expiry date is a common condition. Failure to do so - perhaps by leaving articles on the premises - may be costly.
Any other breach might be picked up on - unauthorised sub-letting or sharing, for instance. The landlord will make a full inspection to see what can be alleged.
Quibbling about a break clause may be just a ploy to increase a dilapidations payment - the sum which the tenant would have to pay the landlord to put the premises back into a good state of repair.
Tenants' advisers now try to strike out preconditions in new leases or tone them down. This means that while the tenant will still be required to observe the lease terms, a breach of covenant will not have the effect of invalidating the break notice.