Susan Barilich, P.C.
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Can I break my commercial lease without penalty?

When you signed your lease on the commercial property you had chosen for your business, you likely had big plans for your future. Maybe this store front property or office suite provided just the space you needed to get things started, and you were happy to sign a lease committing to three, five or even 10 years of paying rent.

Things change. Perhaps your business exploded faster than you expected, and your commercial space is no longer adequate to meet your growing needs. On the other hand, maybe things aren't going so well, and you need to cut your losses and close the business before you lose everything. In either circumstance, you are considering breaking the lease on your commercial property. How can you do this and avoid your landlord suing you for breach of contract?

Breaking up is hard to do

A lease is a business contract, and it legally binds you by its terms. However, almost everything is negotiable, and you may be able to work out a deal with your landlord that would save both of you the trouble of going to court.

Your first step is to fully understand the real estate laws in California and the terms of your lease, especially if it has been over a year since you signed it. You will probably find sections concerning breaking the lease. Some of the details to note include:

  • The landlord's process for terminating your tenancy
  • Any financial penalties for breaking the lease
  • Loss of your security deposit for early termination
  • Your landlord's rules for subletting

Subletting, if allowed, may be one solution to your problem. If you can find another business to take over your tenancy, your landlord may be willing to forgive any penalties. However, if your landlord agrees to subletting but your lease forbids it, be sure to get permission in writing before you follow through with finding another tenant.

Negotiating may work for you

Aside from subletting, you may be able to negotiate with your landlord to release you from the remainder of your commercial lease without penalty. You may be able to request a modification of your lease to allow you out of the contract legally. You can always mention any conditions of the property that are unfavorable to you and remind the landlord of contract breaches he or she may have committed during your tenancy.

Because commercial landlords often network with each other, you will want to avoid gaining a negative reputation by simply packing up and abandoning the property. Providing written notice to your landlord, leaving the property in excellent condition and working to help fill the vacancy may go a long way to maintaining a positive rapport with other commercial landlords. However, you always have the right to seek legal counsel when dealing with contracts and leases.

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Susan Barilich, P.C. | 535 N. Brand Blvd., Ste. 504 | Glendale, CA 91203 | Phone: 818-500-0377 | Map & Directions