Chapter 11:

Getting Out of a Lease


When you get into something, you also need to know how to get out. Getting out of a lease may never become necessary. However, who is to say that in the future you may not want to relocate, have your eyes set on a new life perhaps or want to buy your own building. If so, the property owner may not be willing to let you out of the lease. It is best to be prepared for this going in. Even the kindest property owners can balk at letting a tenant out of their lease; that is the nature of business. The easiest option is if you negotiated a good lease up front, one with clauses that have the purpose of getting out of a lease.


  • A break clause. A break clause allows the lease to be terminated early, either on a specific date or dates or any time during the lease, depending on how it is written. It will probably end up containing things you need to do before the property owner will honor the clause. The property owner will likely be very particular everything is done exactly before honoring the break. For example, one break clause required the tenant to paint with 3 coats before the lease would be ended. The tenant only used 2 coats, invalidating the break clause and requiring the continuation of the lease.

  • A bail out clause. This allows the lease to go away if a certain condition does not occur, such as your sales reaching an agreed upon amount by a certain time.

  • A clause in the contract that discusses what happens if it is ended early. This is usually put there by the property owner so you or your lease negotiator may need to get that changed to something you can deal with.

  • However, if your lease agreement does not favor your getting out, there are other possibilities.


  • You might try to find the landlord a new tenant. Perhaps the landlord will agree to take the new tenant and let you off the hook. This is not likely to happen if you have been a good tenant and the owner is banking on you. However, if the owner is kindly, a new tenant with good references should be a fair exchange. You may have to throw an incentive into the pot which could be anything imaginable that the owner would agree to, as in the previous 3 coats of paint example. Adding the new tenant to your existing lease is not the same thing. You will want your name off the lease if you want a clean break.

  • You could sublet the premises if your lease agreement allows this —commercial leases generally do. If yours does not, then ask to have it put in the lease. You would find somebody to use the space, pay you, and you would use part of the payment to pay the rent. If the person you rented to damages the premises or leaves, you would still be responsible.

  • You could try to reach a new agreement with the landlord. If the property owner can likely re-rent, particularly for a higher amount, they may be willing to let you buy out the lease for a reduced sum.

  • You could try to sell the business to someone for the amount of the rent you would need to pay to the owner as incentive. Or for more if you can get it. You do not have to include your client list in the sale. They would naturally get some of your clients in the fall out but what the buyer is really getting is a ready built establishment. The landlord would have to agree to a new lease for the buyer as part of the deal.

  • In the worst case of breaking a lease, you could be sued by the property owner. The lease agreement often contains a liquidated damages clause. This says the money to make the property owner whole is so difficult to figure out that we agree on this amount. Otherwise, the lease will have an acceleration clause that makes everything due now. It is possible the court will tell you to pay the property owner’s attorney fee if they win.

  • However, the property owner has a duty to mitigate damages. That means they must make an attempt to find another tenant and to re-lease the unit. If this can be done for the same amount or higher than you were paying, you’re off the hook. If it leases it for a lower amount, you will owe the difference.


    Since the property owner may not be terribly motivated to re-lease and since you don’t want to get into court and pay attorney fees, you will need to rely on the other options for getting out of the lease. But the best plan is to get a lease up front with a break out, a bail out clause or some other provision for getting out early.


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