Commercial lease - ending prior to break clause

confusedtenant1

Hi MSE’s, 

I’m a small retail business owner. My business is doing well however my lung health is declining. Sadly, I need to give my store up as soon as possible for some major surgeries coming up. My next surgery has a 50/50 chance of success. I’m rather complex and also very poorly. 

We have a break clause coming up in May 2024. With my physical health rapidly declining, whereby I’m no longer able to do the day to day, I’m wondering if anyone here has any advice on how to approach my landlord to request an early end prior to the break clause date? I have been a reliable, trustworthy and on time tenant but I just have a feeling he may try and keep me for the duration because of this. It’s a tricky market after all with good paying tenants being like gold dust.

Please can you help? 

Thank you

DullGreyGuy

What are you doing with the business? Selling it? Are you a sole trader or a limited company?

Does your lease allow reassignment or sub-tenancy?

confusedtenant1

Thank you so much for your response. 

My business is my personal brand. I don’t wish to sell it - it’s a lifestyle brand so wouldn’t work well for someone else. I’m a limited business. And my lease does not permit any sub letting sadly. I unfortunately don’t have time on my hands to make arrangements to line up a new tenant. 

Thanks in advance

Jeremy535897

Did you give a personal guarantee in respect of the rent?

The standard approach is to write to your landlord, explaining your circumstances and asking for an early termination. You may have to offer a percentage of the rent that would otherwise be payable after termination. The company's asset position will be relevant if you have given no guarantee, as presumably the company will soon cease to have an income stream.

confusedtenant1

Jeremy535897 said:

Did you give a personal guarantee in respect of the rent?

The standard approach is to write to your landlord, explaining your circumstances and asking for an early termination. You may have to offer a percentage of the rent that would otherwise be payable after termination. The company's asset position will be relevant if you have given no guarantee, as presumably the company will soon cease to have an income stream.

Jeremy thank you, I thought something like this might be the case so will factor in those payments. I do have a personal guarantee also. I want to leave on good terms.

In regards to the company’s assets, I would hope to clear the stock with a closing down sale but imagine there may be some stragglers so will look at overstock companies for this. 

Is there anything else in your wisdom I should be ensuring prior to approaching my landlord please? 

Thanks so much again

Jeremy535897

The only other thing might be to have the lease reviewed by a solicitor to see if they have any additional thoughts.

tightauldgit

If you're a Ltd company you can liquidate the business but if you have a personal guarantee on the lease then you are reliant on either a) the goodwill of the landlord b) some legal 'escape clause' in the lease not being 100% correct. 

Since it's a commercial lease, then generally you will find that landlords are fairly amenable to changes provided it doesnt cost them anything and doesn't leave them any worse off. If you pay the fees to find a new tenant plus any legal fees involved then there's a good chance that the landlord will let you leave once you have someone else willing to take over the lease. That will be pricey though. 

You can approach the landlord and ask for his sympathy and to let you out of the lease but there's no obligation on his part to do so. 

Do you have a 10 year tenancy? is it registered at the Land Registry? Are the terms all legal and correct? A solictor can review the document for you and see if there might be an 'out'