In today's difficult economic climate, tenants who have
negotiated a break clause in their commercial lease may be alarmed
to find out just how difficult it can be to successfully exercise
In essence, a break clause allows either the Tenant or the
Landlord to terminate the Lease early. Although this sounds fairly
simple, in practice, a Tenant wishing to exercise the break may
find it anything but straightforward. The right to exercise a break
is usually conditional upon certain conditions being fulfilled,
such as rents being paid up to the break date, the need to give
vacant possession and to comply with other general tenant
obligations in the lease.
Vacant possession is generally considered to mean that;
The property needs to be empty of
The Landlord must be able to take
immediate and exclusive possession, occupation and control of the
The property must be empty of
chattels that might otherwise prevent or interfere with the
landlord's right to possession of a substantial part of the
A recent case on this issue was Riverside Park Ltd v NHS
Property Services Ltd (2016) which focused on whether the
Tenant's failure to remove partitioning at the premises meant
the break was ineffective.
When the Lease was granted, the premises were open plan. A
licence for alterations was entered into by the Landlord
authorising the Tenant to install a large amount of partitioning.
The Tenant sought to exercise the break clause in the lease but
failed to remove the partitioning by the break date.
The Landlord argued that the break notice was ineffective as the
presence of the partitioning meant that the Tenant had failed to
provide "vacant possession". The Tenant on the other hand
contended that the partitioning was now a fixture and thus formed
part of the premises (i.e that they were not chattels which would
be an impediment to giving vacant possession).
It was decided that the partitioning was demountable as it was
constructed on top of a raised floor and reached the underside of
the suspended ceiling and was only fixed by screw fixing and not
affixed to the structure. It was therefore held that the
partitioning did indeed prevent and interfere with the right of
possession, so the tenant could not break the lease and had to
remain in occupation paying the rent for the rest of the lease
Thus Tenants who wish to exercise their break clause must check
and consider any conditions in good time before any notice to
exercise the break has to be served and to consider what work they
may need to do to secure an effective break... If in doubt, seek
our advice in good time.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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