So, your lease contains a break clause, you’ve told the landlord you’re leaving, and you’ve got a removal van lined up. It’s as simple as that…. or is it? Successfully exercising a break clause can be quite technical and open to a number of potential pitfalls. Here are some of the crucial things to look out for:
1. Getting the dates right!
Most break clauses will require the tenant to serve notice on the landlord at least six months in advance. It may seem obvious but, if six months prior notice is required, then six months prior notice must be given. Once the date for notice has passed, the break is lost. Top tip: diarise crucial dates as soon as you enter a lease.
2. Paying the rents
Break clauses are frequently subject to paying the rents up to the break date. In most leases the “rents” include not only the annual rent but also any service charge, insurance rent, interest and other sums due. Where payments are required, make sure the sums are certain or, at the very least, due and demanded well in advance, so you know exactly how much to pay to comply.
Remember that the obligation to pay rent up to the break date means to pay rent as it falls due. This means for a typical ‘quarterly in advance’ lease, if the break date is on or just after a quarter date you need to pay the whole of that quarter’s rent to comply. This is a common mistake made by tenants! Top tips: avoid break dates falling on a rent payment date, and include provision for the Landlord to promptly repay any amounts relating to after the break date. Otherwise – although it seems unfair – there is no obligation for these monies to be returned.
3. Vacant possession
Many break clauses require the tenant to provide vacant possession on the break date, a phrase which is open to interpretation. Essentially, the tenant has to have ceased to occupy the premises and removed substantially all items left on site on or before the break date. Top tip: it’s far better to use words like “give up occupation” – that way, leaving a few items behind is less likely to scupper the break.
4. Full compliance
Some landlords will include a ‘sweeper’ within a break clause suggesting that, as a pre-condition of exercising the break, the tenant must have complied fully with all covenants and obligations within the lease. This type of condition is very much an example of a landlord “trying it on” and should be avoided at all costs, as it is almost impossible to comply with.
The thing to bear in mind always is that most break clauses can only be exercised once and in a climate where tenants are hard to come by, landlords are likely to pick up on any mistakes (however small) which could invalidate your break. Keep it simple and get it right!