A break clause is an option for you and/or the landlord to terminate the lease early. For example, you might negotiate a twenty year lease on the premises, but with the option to terminate the lease after four years if you choose to.
Key considerations include:
- Whether the break clause gives you the flexibility you want. In the example above, after four years you will no longer have the right to break the lease for the remaining sixteen years.
- What notice you need to give if you want to exercise your right to terminate the lease.
- Whether there are any penalties attached to exercising the break - for example, a break payment.
- Whether there are any other conditions attached. Commonly, leases give the landlord the right to refuse to allow the break if you are in breach of the lease in any way, however minor.
You should be wary of any break clause in favour of the landlord, which could allow the landlord to terminate the lease early against your wishes.
