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SELLER'S GUIDE

Do's and Don'ts of Breaking a Business Lease

There may be several reasons you want to break a business lease and if your current lease affects your profitability then you might not have a choice. A business lease is a contract and one of the most common penalties is that a landlord will withhold any security deposit you placed because you broke your end of the bargain. There may be times to when your entire inventory is for sale because you are going out of business and then something will have to be done about the open lease. Landlords in some instances can legally make you pay the entire lease payments that would have otherwise been paid had you not gone out of business. It is important to protect yourself and your interests when considering breaking a business lease.



Another big reason for breaking a business lease is because you have determined that your location is no longer good for business. It could be that many changes all around you have just made your location a bad one. It could also be that road or other construction around your business venue has presented accessibility problems for your customers and is driving them away. It is better to move than risk losing your cash flow because of external factors beyond your control.

The Do's of Breaking a Business Lease

When you decide you are going to break a business lease, read your lease agreement and determine just what your rights are in this case. There may be clauses in there that cover issues like accessibility to your business. You should also seek the assistance of an attorney who can study your lease agreement and see what the damage will be if you back out of the lease.

Another thing you should do is just talk to your landlord. Now keep in mind that the person you are leasing from has a business to run too and many of his decisions were made with consideration of future cash flow from you. Don't be surprised if your discussion with the landlord alerts him to start seeking new tenants. Only you know what type of relationship you have with your landlord and it is good to be honest in these matters.

If you know that your landlord will not budge on the lease, you should consider sub-leasing the building space if you are allowed to do so. This creates a win-win situation for everyone. The landlord keeps getting payments, you can move, and the sub-lessee gets some office space.

The Don'ts of Breaking a Business Lease

Don't be surprised if after you warn your landlord that you want to break your lease that your relationship with that person will change. You may notice a drop in the quality of service as the landlord seeks out someone else to keep his cash flow going.

Also, don't just abandon the property. Remember this is a contract. You will more than likely end up in court after your landlord sues you for the remaining rent. Abandonment will not look favorably with a judge either. When you talk to your landlord about breaking a lease, you must get any new agreement in writing. Word-of-mouth never stands up in court.


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