The exercise of a break clause in a lease is an action that can have many pitfalls and should always be undertaken with timely professional advice.
When a tenant wishes to exercise its right to break a lease, it is important to ensure that there is no breach of the lease terms that can allow the landlord the right to refuse the tenant’s application.
Normally, one of the conditions that has to be satisfied is that the rent and other charges are up to date. Recently, the court heard a dispute that arose when a landlord sought to refuse an application to break a lease on the ground that an invoice for insurance of the premises sent a month prior to the break date had not been paid.
The invoice covered a period after the date on which the tenant would have vacated the premises, and thus would have been refundable had the tenant paid it. The wording of the lease required the tenant to pay the landlord such sums as the landlord ‘may from time to time expend’ with regard to insurance.
The matter reached court. The judge agreed with the tenant that it could not be in breach of the lease in respect of an invoice raised for a future expense of the landlord. The landlord had not, as a matter of fact, incurred the insurance expense.
In this case, the specific wording of the lease made the legal position clear. Had the lease been otherwise worded, the tenant might have fared differently. If you have a lease nearing a break point and you wish to terminate it, we can advise you on how to comply with the necessary procedures.
Contact Sam Woods, Associate, Wolferstans on 01752 292277 or email firstname.lastname@example.org for advice on any property matter.