Break notices – beware the DIY option
Mark Banham explains why it is vital that tenants are very careful when completing and serving a break notice. The consequences of getting it wrong can be disastrous.
For many businesses the cost of premises is one of the largest budgetary burdens. There is often a substantial cost-saving to be had by relocating to a smaller or less high profile property. Such a cost-saving could be the difference between the success or failure of the business; particularly in the current economic climate.
Leases of commercial premises often contain clauses giving tenants the option to break the lease. On a first read the exercise of a break option may seem very straightforward: for example, what could be so complicated about giving no less than six months notice and vacant possession? Surely it’s just a letter (or even an email)?
But beware! Just as you (the tenant) are facing financial pressures, so your landlord may similarly be experiencing difficulties. There are fewer businesses looking for properties and not only will your landlord be faced with the prospect of no rental income, but he will also need to pay business rates on the vacant property. Just as it is in your interest to serve the notice so it may well be in your landlord’s interest to resist it.
The law clearly states that in order to exercise a break option the tenant must comply strictly with the requirements laid down in the lease. This means that getting the break notice right is likely to require considerable attention to detail. There is no shortage of traps awaiting the unwary. For example, if notice were to be served by post one day before the day on which it first becomes possible to serve the notice then the notice will fail. Similarly if notice is served by email but the lease does not permit service this way then the notice will fail. Another common problem is not serving the notice on the right person. If the notice fails the tenant will need to continue paying the rent and any other expenditure required under the lease for the remainder of the term.
These may seem like minor points and something that you cannot imagine getting wrong, but mistakes are easily made and the consequences of making them are very costly. So whilst it may be an inconvenience and an expense to instruct a lawyer to serve the notice for you, it will ensure that you are not vulnerable to challenge.
If you believe that you may be in this situation please contact Mark Banham.