If you’re a first-time entrepreneur, you’ll encounter a few things you may never have imagined no matter how prepared you are. You might discover that the location you have chosen is not quite suitable for the products or services you’re selling. There will also be financial hurdles to overcome; like being unable to make rent on time. These are very stressful situations for a business owner.
The contract you sign when you rent commercial space contains all the conditions that go into the agreement and tells you how long the lease will last. What happens if your business needs rebooting you have to move out of your shop? What happens to your lease?
All may not be lost. This article will explain how you might be able to terminate your lease agreement ahead of its set expiration.
- Speak to the landlord
- Find out if there has been a breach of agreement
As with signing the lease, the first person you need to approach about your situation is the landlord. Be nice; explain your reasons for needing to terminate the lease and give them time to think it over.
It is important to maintain positive relations with your landlord. Therefore, it is prudent to give them enough time to ensure they are in a position to find a new tenant as soon as you vacate the property. You may even help by looking for their next tenant.
Remember, your landlord has the right to refuse your request. If they do, there may be other options available to you.
This is one of the most common reasons lease agreements are voided. If either you or your landlord breaches the terms of the commercial lease agreement, either party has the right to terminate the agreement.
Make it a point to read the fine print of the agreement – you want the conditions that constitute a breach clearly stated… In most cases, these clauses protect the landlord so, before you sign the lease, ensure that the landlord’s obligations to you as a tenant are in writing as well.
Lease transfer
This allows you to look for another tenant who may want to occupy the space you hope to vacate and transfer your lease to them. In most agreements, the landlord must agree to the transfer. Again, check the terms of your lease before you make the transfer. Keep in mind that you may be responsible for any legal fees a lease transfer may entail – including paying for your landlord’s legal fees. However, this is preferable to paying rent on a place you may no longer need.
Subleasing
Subleasing involves leasing the property to a third party while retaining the legal responsibilities in your lease with the landlord. You need to speak with the landlord about this arrangement before you sublet. Do not assume that they will automatically agree.
Summary
Terminating your lease early will come at a cost, not to mention dealing with your landlord. You will need to examine your options to make sure you don’t end up paying rent and utility costs on a losing proposition. If you approach the situation in the right way and ensure your landlord does not end up in a disadvantageous position, you’ll have a much easier time transitioning into the next stage of your career.
Should you need commercial real estate in Merced, CA and its surrounding areas, let our team at Soldavi Realty help you. Call 209.975.7653 or send us an email at info(at)soldavi(dotted)com.