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A Guide To Terminating Commercial Leases when Moving Premises

Moving premises and Commercial leases Parslows JerseyMoving premises – How to terminate a commercial lease early

If you are a tenant of commercial premises you may be in a position where you wish to move to larger premises (or smaller premises) but still have a number of years left on the commercial lease.  What options do you have for moving premises?

First and foremost you should always check the commercial lease terms and covenants.

Is there a break clause in the commercial lease?

You should check whether your commercial lease has a break clause, and if so the terms for exercising it, before considering moving premises.

You should check as to whether there are additional conditions to fulfil before you can exercise the clause.

For example, the clause may stipulate that before you can exercise the clause all rent must be paid up to the next rent payment date; and you must have complied with all other covenants in the commercial lease.

If you consider you may be in breach of any conditions (and they are required conditions) you must get these sorted out before you consider exercising the clause.

The timing in relation to exercising the break clause will usually depend on the length of the term of the lease.  However, they are commonly seen in the third or fifth year of the term of the lease.

What is important is to ensure you serve notice within the required time periods. If you’re in any doubt you should take legal advice from our team of expert Jersey Lawyers

Does your lease permit assignments?

In general terms, most Jersey commercial leases will permit an assignment of some sort or another.  You should check if your commercial lease has a section within it entitled ‘alienation’.  This section will set out the rules regarding if and how you are permitted to assign your lease to a third party.

At the outset you should check the conditions for consent within the commercial lease.  This will determine the conditions that the landlord will require you and the assignee to fulfil before agreeing to the assignment.

Typical conditions may include a stipulation that the assignee is of the same or better financial standing as the outgoing tenant and/or a requirement for a guarantor or rent deposit to be provided.

AuthorCarl Parslow[/vc_column_text]


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