A break clause can be included in a fixed term lease allowing either party to terminate the lease early. The right to break may arise on one or more specified dates or it may be exercisable at any time during the term. Any conditions attached to the right to break must be strictly performed and time will be of the essence in respect of any time limits in the break clause. This means that if you do not exercise the right within the time limits then that right will be lost. The break clause will state who has the right to break.
The break dates are the dates on which the lease may be terminated early. These may be:
- Any time (a rolling break).
- Any time after a specified date. The tenant has a minimum period in occupation before the break becomes exercisable.
- On agreed fixed date or dates. Fixed dates are often linked to rent review dates so that the tenant may end the lease if the rent increase proves to be unacceptable.
These dates may be expressed as actual dates or dates in relation to when the term began, for example there may be a right to break on each fifth anniversary of the grant of the lease. It is preferable to work out the precise dates and insert these in the break clause to avoid any uncertainty. If you need any help with this please contact us and we will be able to help you.
Break clauses may specify conditions as well:
- The tenant must have paid all the payments due under the lease, for example, rent.
- The tenant must have performed all its covenants.
- The tenant must not have breached its repairing covenants in a material way. This means in a serious way or in a way which is obvious to the landlord. In determining this, the court may look to the actual breach, the practicalities of quantifying the damage caused by the breach, the extent of the tenant’s efforts to avoid breach, and whether the landlord has a genuine interest in strict compliance as opposed to an opportunity to take advantage of the tenant’s non-compliance to prevent the exercise of the right to break.
- The tenant must be able to give vacant possession on the date they wish to break the lease.
The break clause should specify whether the conditions must be satisfied by the date of service or by the break date, or both.
The break clause may include notice provisions setting out how the break notice must be sent to the other party and when it will be deemed to have been received. If not, the general notice provisions in the lease may apply.
If you would like to discuss break clauses or any other aspect of property with us please call us on 01562 514870, email
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or contact us using the contacts page of our website.
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