It could be that your business has grown faster than anticipated, and it’s simply not feasible to wait until the end of your lease to upgrade to a bigger location. Or your company could be in need of downsizing, and you’re looking for a place with more affordable monthly payments. Either way, in your situation there might be options for freeing yourself of your commercial lease so that you can do what’s right for your company.
Buying out your contract
As soon as you decide that it’s time to try to get out of your commercial lease, the first step you should take is to pull out the lease agreement you signed for the rental of the premises. Review it to see if there is a clause that will allow you to pay a lump sum to end the contract immediately.
Even if such a term isn’t in your lease agreement, you can hire an attorney to try negotiating with your landlord. Depending on the state of the rental market in your area, they might be willing to allow you to leave early without any extra payments. This most often happens when prices have risen in the area, and they know that they can make more money by charging a new tenant higher rates for the premises that you are vacating.
Subletting the premises
In your lease agreement, there might be a provision that allows you to sublet the premises to someone else. Even if your agreement is silent as to subletting, you can likely negotiate with your landlord to approve it.
If you are able to find a new tenant that is willing to take over the premises, you will be free to pursue other properties. It’s important to note, however, that in a subletting situation you aren’t completely free of legal liability on the property. Your subtenant will be paying rent to you, which you will then pay to the landlord, but you will ultimately be responsible if the subtenant stops paying or if their employees or customers cause any property damage.
If you want to be truly free of your contractual obligations, you will have to convince your landlord to re-let the property. This is when they create a new contractual relationship with your subtenant and assume them as the new primary tenant. If that happens, you won’t be liable anymore.
A key characteristic of successful businesspeople is knowing how to be flexible and ready to act when an opportunity presents itself. Knowing how to get out of a commercial lease early just might make all the difference for your company’s growth.
