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Breaking a commercial lease may bring penalties

On behalf of Kadish & Associates Law Group posted in blog on Tuesday, January 23, 2018.

When you signed the lease for the commercial property where you planned to run your business, you had no idea what the future would hold. Nevertheless, you committed to the terms of the lease and opened your business on the site. Now, sometime later, your situation has changed. Perhaps things didn’t go as well as you hoped, and you have no choice but to close your business. It could also be that your business is thriving, and the Arizona commercial space you are leasing is no longer adequate.

Whatever the reason for leaving, you are bound to the lease. Keeping its terms may be financially devastating, but breaking it could leave you facing legal consequences if your landlord decides to sue. Is there a way to get out of the lease without negative ramifications?

Work it out with your landlord

Of course, your landlord is concerned with the money. A lease guarantees the landlord regular rent payments for the length of the contract. If you break the lease, you leave the landlord with an unanticipated vacancy. However, your landlord may agree to let you out of the lease under certain conditions, for example:

  • Your landlord agrees to renegotiate the terms of the lease to shorten its duration.
  • You have had bad experiences with the landlord upholding his or her terms of the lease.
  • You agree to pay a penalty in lieu of the remaining rent payments.

Another option that may protect you from legal action for the breaking of a lease is to bring a new tenant to your landlord. Review your lease carefully before proceeding, because the terms of the contract may forbid you to sublet. However, even this may be negotiable if your landlord knows you want out of the agreement. Having a new business tenant ready to present to your landlord may diminish the penalties you may face for breaking the lease.

The advice of a legal professional cannot be underestimated. Since you are dealing with legally binding contracts and state laws, you want to be sure you avoid any liability for you or your business. An attorney will review your lease and provide sound guidance for the best alternatives. Until you and your landlord reach an agreement, real estate experts advise continued payment of your rent and scrupulous care for the cleanliness and maintenance of the property to protect your security deposit.

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