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4 Tips to Get out of Your Commercial Lease

By Ephrat Livni, Esq. | Last updated on

Ideally, you consider how to get out of a lease before you sign it. If that's not the case, and now you find yourself seeking release from your lease, here are some steps to take.

Remember, if you break your lease you are liable for the time that the space remains unoccupied. But a landlord must mitigate damages, meaning that the owner cannot just collect your money without seeking a replacement and working something out.

Four Steps Before Stepping Out

1. Read Your Lease Very Carefully. Review your current agreement and look for provisions that address early termination and penalties. Maybe you will get lucky and find a loophole or some sort of allowance for your situation.

2. Talk to the Landlord. This seems pretty basic, but it's worth saying. Once you have sorted out what your lease says and why leaving is in the best interest of your business, speak to the owner. You may be able to negotiate a lease termination that works out well for both parties.

Try to understand the other party's perspective and needs. People tend to be much more reasonable when they perceive recognition of their position. While you are no doubt trying to terminate the lease for your own reasons, do not dismiss the landlord's preoccupations and concerns. Meeting these needs might help you get out of your lease with minimal penalties.

3. Find a Replacement Tenant. One way to save the landlord a lot of hassle and avoid having to pay rent for a place you no longer wish to occupy is by finding an alternate tenant. Perhaps a neighboring business has been eyeing your spot. If you don't already know someone who wants to take over your lease, consider ways you might locate such a person.

What are some publications you might advertise in? Do you have connections to potential tenants that you could put the landlord in touch with?

Of course, the landlord is not obligated to take the tenant you find. But having a replacement and making efforts to make things easier for the other party makes it more likely you will get what you want. It will also be more difficult for the landlord to claim the space was abandoned and that you owe money if you presented options.

4. Break the Lease and Wait. Finally, you can break the lease and wait for the worst. The truth is that your landlord will have to sue you to collect unpaid rent after you leave. Given the nature of the agreement in question -- a commercial lease -- it's likely that your landlord will have lawyers who are ready, willing, and able to file suit. But remember they have to actually do that.

For your part, consider hiring a real estate attorney to review the lease for you once you think about leaving. A lawyer will advise you on the technical language of contracts and can help with negotiating a term change or a settlement so that you can avoid a lawsuit altogether, and signal from the start that your goal is to get to yes.

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