Exercising a Break Clause When Terminating a Lease

I am a tenant and I want to exercise a break in my lease. What should I consider?

A break clause allows you to terminate a lease before the expiry of the contractual term. However, to ensure the break is exercised correctly, the notice must be served in compliance with the lease terms. There may also be conditions to the break that must be complied with.

Is there a fixed or rolling break date?

A break clause can be drafted in different ways. There may be a fixed date or dates by which to operate the break. Alternatively, it could be exercised at any point by providing a given period of notice (known as a “rolling” break right).

How can I exercise the right?

To exercise the break, you will need to serve a notice to the landlord in accordance with the terms of the lease. It is imperative that the correct notice period is given and you comply with the notice provisions in the lease. These may specify the entity to be served and the address to which the notice should be sent to.

Are there any conditions that I need to comply with?

Sometimes there are conditions that need to be complied with in order to ensure that the break is effective.

These may include the following:

Payment of sums under the lease. This can include rent, service charge and insurance rent, amongst other sums. Unless the lease states to the contrary, all sums due must be paid, even if they relate to a period after the break date. For example, if the break date falls between two rent payment dates, the previous quarter must be paid in full. 

• Some leases contain a provision that requires the landlord to refund any sums paid for the period after the break.
• Provide vacant possession. However, this can be more onerous than simply giving up occupation, so it is important to check the wording of the lease.
• A requirement that all the covenants under the lease have been complied with. This can be a particularly onerous condition as it may require the tenant to comply with covenants such as those relating to repair and maintenance.

If the break conditions are not complied with, the break right will not take effect, and the lease will continue for the remainder of the term (unless the landlord waives compliance with the break conditions).

Here to help

If you have any more questions or would like more information regarding break notices, you can contact our Property Litigation Team below.