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How to Get out of a Commercial Lease Early

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By Christopher Coble, Esq. on May 31, 2017 2:00 PM

Maybe you're expanding and you want more space. Or maybe you found a better deal closer to customers or clients. Or maybe you just got stuck with a deadbeat landlord. Whatever the reason, your small business is looking to change locations. But there's just one problem -- your current lease isn't up yet.

You obviously don't want to pay rent on space you're not occupying, so how do you get out of your commercial lease early, without owing the remaining rent? There may be options.

Prepare an Exit Strategy

Obviously, it helps if you've negotiated an exit before you signed the lease. Having prearranged terms for leaving early will let you know exactly where you stand. One option is to include an exit clause in the lease. While most landlords want to guarantee their income over the long term, there may be some provisions -- like those tied to income projections -- that could trigger the possibility for an early ext. And you could consider shorter lease terms with options to extend if you choose. These can provide more flexibility in the length of the lease.

Amend an Exit

There are ways to amend a commercial lease. First you'll need to know the lease itself, inside and out, to know whether amendments are possible and how the process works. After that, it's all about negotiating with your landlord. Depending on your scenario and your skills as a negotiator, you may convince your landlord to rewrite the term of the lease to allow for an earlier exit. Tracking down a replacement tenant on your won can also help. While the landlord is not obligated to take the replacement, it can serve as a show of good faith and make the landlord more amenable to the exit.

Just Exit

Finally, you could just break the lease and move out early. If negotiations break down, you could just pack up and leave. Yes, your landlord can sue you for the unpaid future rent. But under most commercial leases they also have the duty to mitigate damages -- meaning they cannot just sit back and wait for your checks to roll in without looking for a replacement tenant. Nor can your landlord charge both you and a new tenant rent on the same space.

Exiting a commercial lease early can be complicated. Get the help of an experienced commercial attorney to review your lease.

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