commercial lease

ps2659

Can anyone give me an idea in regard to a commercial lease, I own a property and rent it, its on a 3 year lease 5 months in and the tenant wants out can anyone give me an idea as to how much to charge for a surrender of lease roughly there is no break clause, thanks in advance  

Devongardener

What does the lease state about early termination, is there a break clause?

Tucosalamanca

What do the terms of the lease say?

This is the tenants problem, a lease reassignment should be possible but the onus is on the tenant to market the property and find a replacement tenant.

Alternatively, does the lease have a break clause? You could use this as the starting point for negotiation.

Example. Break clause after 18 months (half way through lease), five months already passed, 13 months lease needs to be paid.

Either route is going to cost the tenant, but that's the nature of commercial lease and what they signed up for.

Hopefully you are holding a sizeable deposit (3 months?) to cover your losses if the tenant is difficult.

Ayr_Rage

ps2659 said:

Can anyone give me an idea in regard to a commercial lease, I own a property and rent it, its on a 3 year lease 5 months in and the tenant wants out can anyone give me an idea as to how much to charge for a surrender of lease roughly there is no break clause, thanks in advance  

@Devongardener looks like they've edited the OP, no break clause, which is pretty daft!

@ps2659 in that case you'll just have to negotiate with the tenant unless anything is specified in the lease you both signed.

ps2659

Devongardener said:

What does the lease state about early termination, is there a break clause?

No Early termination and no break clause

Ayr_Rage

A lease without any clause regarding early termination sounds very odd, who wrote it?

If you cannot come to a mutual agreement and the tenant walks away you'll have to take them to court and hope the lease isn't full of legal holes.

ps2659

Ayr_Rage said:

A lease without any clause regarding early termination sounds very odd, who wrote it?

If you cannot come to a mutual agreement and the tenant walks away you'll have to take them to court and hope the lease isn't full of legal holes.

The lease was drawn up by a solicitor with a guarantor 

poseidon1

ps2659 said:

Can anyone give me an idea in regard to a commercial lease, I own a property and rent it, its on a 3 year lease 5 months in and the tenant wants out can anyone give me an idea as to how much to charge for a surrender of lease roughly there is no break clause, thanks in advance  

Your tenant walking away from their lease commitment may just be the start of your financial woes.

Do you know how much the business rates are and when this becomes your liabilty as landlord?
Do you have mortgage borrowings outstanding, if so presumably you can continue payments from your other resources. Was the lease FRI? Has the tenant at least paid for building's insurance for the year? What happens to the cover in the event of the impending vacancy? 

Have to say if you signed off a lease prepared by a solicitor without the all important break clauses (as well as dilapidations), big question mark over the solicitor's competency ( negligence?).

 However even harder questions you should put to yourself in dabbling in the commercial letting sector which is a very different entity from residential lettings, as you are no doubt discovering.

Ayr_Rage

As @poseidon1 has just said, time to read that lease and see if it really is a bag of worms.

Good luck!

user1977

Ayr_Rage said:

A lease without any clause regarding early termination sounds very odd, who wrote it?

It sounds very normal to me. Any early surrender is a matter for negotiation, there is no need for the lease to say anything about it. 

MWT

user1977 said:

Ayr_Rage said:

A lease without any clause regarding early termination sounds very odd, who wrote it?

It sounds very normal to me. Any early surrender is a matter for negotiation, there is no need for the lease to say anything about it. 

I tend to agree, I wouldn't have expected a break clause or early termination on a 3 year lease.

If this was a 25 year lease then you'd expect to find both of those and clauses covering periodic rent reviews.