Financial difficulties and a burdensome commercial lease can feel like a double blow. But before you resign yourself to the entire term, there are options! Here, we at DMC Recovery explore ways to potentially exit your lease early and free up vital resources for your business.

  1. Review the Lease for Break Clauses:

Commercial leases generally include “break clauses” that allow either party to terminate the agreement at specific points during the term. Carefully review your lease for these clauses and their associated conditions. Early termination might involve a fee, but it could be significantly less than the remaining rent. 

  1. Negotiate with Your Landlord:

Open communication with your landlord is crucial. Explain your financial situation and explore possibilities. Your landlord might be willing to:

  • Reduce Rent: A temporary or permanent rent reduction can significantly ease your burden.
  • Mutually Terminate: A negotiated exit might benefit both parties if the space isn’t ideal for them.
  • Subletting: The landlord might allow you to find a subtenant to take over the lease, freeing you from the obligation. 
  1. Assignment of the Lease:

Can another business use your space? Assigning the lease to a new tenant can be an option, but ensure your lease allows it and the landlord approves the new tenant. 

Important Considerations:

  • Financial Repercussions: Even with early termination, you might be liable for remaining rent, lease termination fees, or restoring the property to its original condition.
  • Impact on Credit Score: Breaking a lease can negatively affect your business’s credit rating.
  • Seek Professional Advice: Consulting an insolvency practitioner can help you navigate the complexities of lease termination, assess your financial situation, and explore alternative solutions like restructuring or insolvency procedures.

Remember, early action is critical. Understanding your options and exploring solutions with your landlord and professional advisors can increase your chances of a successful exit strategy and potentially save your business valuable resources. 

We are here to help!

If you’re struggling with your commercial lease and facing financial difficulties, don’t hesitate to contact us for a free consultation. We can help you explore your options and find the best course of action for your specific situation.