Any fool can get a lease;

it's getting out of a lease that can be the problem

We have recently been dealing with an experienced businessman who operates from several industrial units/warehouses. These have a section for the warehouse/production line and also have an area for the office and welfare facilities.

They had been in the units five or so years and as their business changed and their business property requirements changed they decided that the building is no longer suitable and they want to invoke the break clause.

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What is a break clause?

This is when you break away from your lease and therefore avoid paying rent on a building you are not happy with or no longer meets your requirements.

If at all possible we would always recommend getting a break clause as you never in business know what lies ahead. Only in a very strong market will you be forced to have a lease without a break clause. At the end of the day it is up to you whether you sign it or not. You may be better off with a short lease than one without a break clause.

My lease has a break clause – what do I do to get out of the lease

This question was asked by the business owner and is asked by many owners leasing a property that is no longer suitable for them.

We will start by saying there is a famous case where a break clause in a lease didn't go ahead because the roof windows (also known as Velux roof windows) weren't properly maintained, which was a requirement of the lease. Agreement to invoke the break clause was disagreed by the landlord and rent was paid for a certain number of years. We have no idea whether this is what is termed as an urban rumour as we have heard this via another Dilapidations Chartered Surveyor, however we would say if you don't strictly stick to the terms of the lease, it is certainly a possibility that you continue to pay rent if you haven't met the covenants or the requirements within the lease. We think if this strictly speaking was the case the landlord would have been very pedantic but in theory within his rights. We generally deal with cases which are more clear cut than this where the tenant has simply not adhered to any of the requirements within the lease.

The property is in a better condition than when I leased it

This is a comment that we often hear from people with industrial units and warehouses and indeed any older property. However the problem with this is unless a Schedule of Condition has been carried out when they leased the property then you have to give it back as stated within the lease so if it says good and substantial repair then that's what you need to do.

What is a Schedule of Condition?

A Schedule of Condition is a document that we prepare for you as Chartered Dilapidations Surveyors which limits your liability. It is a photographic record presented in a set way to minimise your liability. We have several unique things that we do which are our Dilapidations unique selling points which we would be more than happy to go through with you and give you examples of; they have worked very successfully over the years.

First things first, know where you are

We say it is very important to understand where you are with a Dilapidations claim, not to think things are worse than they are, which is often a picture painted by the Landlords Dilapidations Surveyor. Equally you do need to consider that you are not in a better situation than you think you are where for example you are saying that the property is in a far better condition than when you took it on but not having any regard for the terms of the lease and the standards set out within this.

Get someone to read the lease who understands leases and can give you a common sense viewpoint

We of course would recommend that you get a Dilapidations or Chartered Dilapidations Surveyor to read the lease, in particular us! So we can explain what the lease means and your best common sense way forward. This isn't by any stretch of the imagination a legal analysis of the lease. Our aim is to help you make a business decision as to what work you need to carry out and what work you don't and what you negotiate on and indeed what you disagree on in the Dilapidations Schedule.

Don't think you can just walk away from the lease

Most landlords are very serious operators with massive funds and resources behind them and understand their business very well and as such will not let companies walk away without paying Dilapidations or coming to an agreement.

We have come across warehouses and industrial units used and abused and some of them pristine. The important thing is to ensure that you meet your obligations within the lease.

Independent advice on Dilapidations

If you have received a Dilapidations or an Interim Dilapidations or are coming to the end of your lease and haven't received a Dilapidations we can provide help and advice. Please Free phone 1stAssociated.com on 0800 298 5424 for a friendly chat with one of our surveyors.

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