ENDING A COMMERCIAL LEASE? HERE'S WHAT YOU NEED TO KNOW

Leases don’t always go the full distance. Sometimes they end naturally, sometimes they’re cut short, and sometimes unexpected things happen. Whether you're renting or letting, it’s good to know the different ways a lease can wrap up.

When Time is Up

One of the most common ways is simply reaching the end of the agreed term. If the lease was for a year, and that year is up, the lease automatically ends – unless both sides decide to renew or extend it.

Calling It Quits Together

Sometimes, both the landlord and tenant decide it’s best to end the lease early. This is known as surrender. It can be done formally with a written agreement, or more casually such like when the tenant hands back the keys and the landlord accepts them without any objections.

Using a Break Clause

Some leases come with a break clause, which gives either the landlord or tenant the chance to end the lease early. To use it, they’ll need to stick to the terms (i.e. giving proper notice and making sure rent is up to date).

Providing Notice

In ongoing or periodic tenancies, either the landlord or tenant can choose to end the lease by giving notice. It’s usually a straightforward process, but the notice has to meet legal requirements, especially when it comes to timing.

When Rules Are Broken

If the tenant breaks the terms of the lease, such as not paying rent or using the property in a way they shouldn’t, the landlord might be able to end the lease through forfeiture. This usually involves giving formal notice and a chance to fix the issue. Tenants can sometimes challenge this in court if they act quickly.

Big Breaches, Big Decisions

In rare situations, one side might break the lease so seriously that it becomes impossible for the other to carry on. When that happens, the lease can sometimes be treated as ended, which is known as a repudiatory breach. It is not something that comes up often, but it can apply in extreme cases.

When the Unexpected Happens

Every now and then, something unexpected happens such as the property being seriously damaged or destroyed. In those rare cases, the lease might be considered frustrated, meaning it cannot realistically continue. However, this can be tough to prove and doesn’t apply to most everyday situations.

One Person, Two Roles

A lease can also end through a merger. This happens when the same person becomes both the landlord and the tenant, and this typically happens because the tenant buys the property. Since one person now holds both roles, there’s no longer a need for a lease, and it therefore ends automatically.

What This Means for Landlords and Tenants

Understanding how and why a lease might come to an end is important for both landlords and tenants. Whether it is a planned exit, a mutual decision, or something unexpected, being aware of the available options helps prevent misunderstandings and potential disputes. If you are unsure about your situation, it’s a good idea to seek advice to make sure everything is handled clearly, fairly, and in line with the law.

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This update is for general guidance only and advice should be taken in relation to a particular set of circumstances.