You’ll face penalties for leaving your current business space, but you might be able to lessen the consequences.
You want to break your Tucson commercial real estate lease? Refer to your contract.It doesn’t matter why you want to leave your current office, retail or industrial space—you want to move to another location, you can’t afford the rent, the people upstairs are too noisy. Your contract will tell you what happens next.
When you signed the lease, you made a promise. Just because you don’t want the space anymore doesn’t mean that the landlord doesn’t want his or her money. But you might be able to lessen the consequences.
Consequences of Breaking a Lease
If you break a lease in the middle of the term, be prepared to pay for the remaining payment, or, in lieu of that, a penalty for breaking the lease.
A standard penalty may mean forgoing your security deposit and paying the remainder of the rent owed until the landlord finds a replacement tenant.
Damage to your reputation as a renter could occur. A bad reference from a landlord or just a disparaging word about your ethics could impact your opportunities for renting new space, especially if you want to relocate nearby.
Renegotiate Your Lease Contract
If you can’t fulfill your terms of the lease, try to renegotiate with the landlord. After all, it is in the landlord’s best interest to be paid what is contractually due.
Ask the landlord to terminate your tenancy so that you’re no longer liable for future fees.
If your landlord does agree to release you from your lease, make sure you get this in writing. You’ll want to make sure, for instance, that the landlord signs a new lease with the new tenant.
Hold on to the paperwork for at least three years. It is advisable to consult with an attorney on this point.
If your landlord prefers not to renegotiate, consider subletting the space to someone else. Again, make sure you get everything in writing and consult with the landlord so that you know what he or she expects from this new arrangement.
Your name will still appear on the contract, so you could be liable.
Help Find a Tenant Replacement
Remember, you can be on the hook for paying rent until a new tenant has signed a lease for the space you’re leaving.
Once you inform the landlord that you plan to break the lease, find out what you can about his or her efforts to find a replacement tenant.
Ask your landlord if you can find a replacement tenant in exchange for a release from your financial obligations. Offering to place an ad in your local newspaper is one way to demonstrate your goodwill.
Learn Your Lesson
You may be out several thousands of dollars for breaking a lease. That’s the bad news.
The good news is that this doesn’t have to happen again, especially if you keep a solid record of the chronology of events.
For example, if the main reason you’re leaving the property is because of space limitations, be particularly cognizant of your square footage needs the next time around.
If you missed a specific clause in the leasing contract, one that will heavily impact your wallet, make sure that the next document you sign has been carefully reviewed.
It doesn’t take long for an attorney to review a lease, so make the wise choice by investing in some legal advice. It could save you a bundle in the long run and you’re likely to learn something that you’ll be able to use in the future.
Commercial Real Estate Group of Tucson specializes in representing tenants and corporate users across the United States, Latin America, Europe and Asia as a member of ITRA. For more information call 520-299-3400.