Break Clauses/Break Notices

What is a Break Clause?

Break Clauses, sometimes also known as Break Notices, are provisions written into a commercial property lease that allows a landlord or tenant to terminate the lease part way through the term. This is usually at one or more fixed points in time (for example, eighteen months and three years through a five-year lease).

Whilst serving Break Notices are a common practice, they require careful consideration at the negotiation stage of the lease and at the point of being exercised. This is because there are often strict requirements in the lease that must be followed to the absolute letter in order to serve a valid Break Notice. Failure to do so will mean that the Break Notice is invalid and the lease will continue, either until the end of the term or until the next break date.

When taking into account rent and business rates, the cost of getting a Break Notice wrong can run into tens of thousands of pounds. Tenants may be keen for early termination of the lease by exercising a Break Clause whilst landlords will be scrutinising the lease to see whether there is valid service, particularly if it will be difficult to find a replacement tenant.

For this reason, as a prospective tenant, it is important that you seek professional advice from a suitable legal advisor prior to any lease and ensure that you commission a Schedule of Condition, as part of the lease. This way you will be well informed and feel reasonably satisfied that you are not left with an expensive bill at the beak in a lease or at the termination of a lease.

We advise you read our section of Schedule of Condition surveys HERE

Can you withdraw from a Break Notice?

Once a Break Notice has been served it cannot be unilaterally withdrawn, so be sure that you want to break the lease before serving it. Serving a notice as part of a rent negotiation is a risky business.

As always, evidence is key, so make sure copies of everything are kept in case a dispute arises and facts have to be proven in court.

The requirements to ensure that a Break Notice is valid are dated, so break clauses in commercial leases remain common for litigation. Assuming a party is able to comply with the conditions of the Break Clause – it is welll advised to seek legal advice before drafting and serving the notice exercising their option to break.

At Dunham Hale Surveyors, we are experienced in Dilapidations & Schedules of Condition and can advise on all aspects pertaining to this complex area and we often deal with legal advisors when drafting these documents. If you would like anymore information, please GET IN TOUCH with us.


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