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