If you've decided to close, move, or expand your small business, one of your first steps may be to contact your leasing agent and inform him or her that you plan to vacate your current space. However, if you still have a substantial period of time remaining on your commercial lease, you could face some strong resistance. In some cases, your leasing agent or landlord may require you to continue making regular monthly payments until the termination of your lease -- even if they've found a suitable tenant in the meantime. Read on to learn more about the consequences of breaking a commercial lease, as well as information on what you can do to minimize these consequences.
What penalties can you face if you break your lease?
Unlike leases for residential properties, commercial leases are generally lengthy -- often between 4 and 5 years. Depending upon the terms of the lease agreement you signed when you took possession of the property, you may be liable for the full term's worth of payments, regardless of whether you're using the space. If you break your lease early, the owner or landlord may also assess penalties in excess of the lease liability.
What should you do if you need to leave your current lease?
Fortunately, there are a few things that can assist you in making a graceful and inexpensive exit from your lease.
First, you should contact a local commercial real estate agent. This agent can work with you to determine what your lease agreement allows, and what your options for early termination of the lease may be. In some situations, you may be able to terminate your lease without penalty if you're able to find an appropriate individual or business to take over your lease. In other situations, you may still be listed on the lease agreement until the expiration of its term, but can be permitted to sub-lease your space to another.
Depending upon which path you choose, your real estate agent like one from Baddour And Associates Commerical Realtors can help you seek suitable sub-lessors to present to your leasing company. In many cases, the fact that these entities have been hand-picked by a licensed real estate agent is sufficient for your leasing company to allow you to exit your lease. In other situations, your real estate agent can ensure that a quality tenant is selected to minimize any potential liability you may have before your lease ends.