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Exercising Break Clauses

How to Exercise your Break Clause "correctly"

More and more tenants are exercising their break clauses in light of financial cut-backs and the economic downturn, with the need to find more cost-effective and flexible office space. The inclusion of a break clause can provide a flexible advantage for office occupiers who may wish to terminate their office lease before it's date of expiry.

Below are some practical issues for tenants to consider when exercising a break clause to ensure they carry out correct legal obligations as set out within the requirements of the office lease:

Make sure you comply with all the requirements set out within your office lease about giving notice and / or exercising a break clause (ie within the stipulated timeframe).

It is vitally important to serve notice in the correct manner (usually this is in writing). Check your office lease for how this should be served.

Keep evidence and receipts of sending Notice and ask the Landlord for receipt confirmation.

Make sure you are up to date with rent payments or any other maintenance charges, as withholding these whilst trying to exit your office lease may hinder your rights.

Ask your landlord for a Schedule of Dilapidations so you can see what repair works you need to carry out before leaving the premises.

Make sure all works are carried out prior to the date agreed with your Landlord and that the property is handed back over with vacant possession.

There are many other legal requirements a tenant must follow in order to bring their office lease to an end. Always consult with a Property Solicitor before exercising a break clause to ensure you follow the correct legal procedure and help protect your position.

If your company is thinking of moving office then check out the Office Space Checklist. It is a free guide to walk you through the issues and considerations needed for find the right new office.

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