The global pandemic has undoubtedly changed the way businesses are operating. Some have thrived and adapted, offering new services and products, others have found themselves struggling and in need of reducing expenditure to ensure they remain viable.
One recent case raises the issue of what happens if a tenant wants to surrender a lease and vacate their commercial premises, but the landlord does not agree. While there are provisions within commercial leases which allow parties to vacate, such as break clauses, in this case that was not applicable. In these circumstances, the tenant’s reasons for wanting to terminate the lease early was simply that they could not afford to pay the rent, were in rent arrears and wanted to close that particular branch of their business.
There were several options available to the landlord here.
The first option was to insist they were entitled to full payment of the rent for the full term of the lease together with the outstanding rent arrears as defined in the lease. After sending the appropriate letter before action for the rent arrears, proceedings could then be issued with all arrears being included as they fall due. However, if the tenant has no money, the chances of recovering outstanding rental payments as they fall due were slim.
The alternative option was to take a commercial view as to what actually suits the landlord best. While they were entitled to full payment for the remainder of the term, they could look to negotiate to allow the tenant to leave, on the condition that all outstanding rent arrears were paid.
This would enable the landlord to find a tenant who was willing to occupy the property for the required term and also one who is in a stronger financial position to make the contractual rental payments in the future.
You can’t get blood out of a stone
A point to take away from this for any landlord is that it is always best to consider the commercial options. While you may be entitled to rental payments for the full term, in reality, if the tenant is unable to meet those financial demands it may be more cost effective to put a tenant in the property that is willing to and able to pay rent as it falls due.
A practical point for a tenant to take away from this is that they cannot simply vacate leasehold property without following the correct channels. The correct method always needs to be followed but it is certainly always worth approaching the landlord for a negotiated exit as this may be more suitable for both parties in the long run.
If you have a contractual dispute, including one involving a lease, contact the Commercial Litigation team at Wilson Browne Solicitors. For general advice on commercial property contact the Commercial Property team at Wilson Browne Solicitors. Call 0800 088 6004 or click here to discuss a free, no obligations initial discussion