Office Lease Exit Strategy Advice
Giving Notice To Terminate Your Office Lease
Being absolutely clear on what you need to do as a tenant to give vacant possession has come under the spotlight again recently. Getting it right can mean the difference between your break clauses succeeding or not. This article looks at the topic and its implications for companies moving office.
What Does Vacant Possession Actually Mean?
Many commercial leases contain a tenant’s right to break its lease provided that certain pre-conditions are complied with. However, a conditional break clause can often make it difficult for the tenant to validly terminate the lease. One of the most frequently encountered conditions of a break clause requires a tenant to give ‘vacant possession’ - but what does this actually mean?
In the recent much anticipated decision of NYK Logistics (UK) Ltd v Ibrend Estates BV  EWCA the Court of Appeal gave a clear definition of what ‘vacant possession’ meant, serving a reminder that exercising a break clause is more than not a technical exercise which requires professional legal advice. In brief, it requires:
The property to be empty of people
The purchaser to be able to assume and enjoy immediate and exclusive possession, occupation and control of the property
The property to be empty of chattels
The tenant in this case was required to give vacant possession on the exercise of the break option in their lease. The tenant had validly served its notice to break and had asked the Landlord if they could remain at the property following the break date for a couple of weeks so that they could complete repairs to the property. The landlord did not respond to the tenant’s request but despite this the tenant ploughed ahead with its plans.
The tenant’s undoing in this case was the presence of its workmen and a security guard at the property in the week following the break date. The court ruled that the continued presence of the tenant’s workmen led to its failure to successfully meet the condition of its break clause.
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