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Leaseholders: Take care when using the breaks!

06 May 2010

Barbara WinnnettBarbara Winnnett looks at break clauses and the importance of checking the details in the terms of their lease.

Many leases these days contain break clauses, giving the tenant the option to bring a lease to an end before the expiry of the term. In these difficult times, this is a particularly valuable right, and great care must be taken to ensure that it is not lost. A recent case illustrates how easy it is for the tenant to lose out and be stuck with an unwanted lease.

Most break clauses will require the tenant to serve a notice on the Landlord within a specified time-frame in order to exercise the break. It is essential that the notice be correctly served, on the correct party and in the manner specified in the lease. Not only that, but the notice must be served by the correct party.

In a recent judgment, a notice was held to be invalid because it did not refer to a dormant subsidiary company. The lease was held jointly by a trading company and a subsidiary, but the notice referred only to the trading company. Although the trading company served the break notice within the time limit and made clear that it wished to determine the lease, it was not clear that the subsidiary also wished to exercise the break and the lease therefore continued.

There are many other cases that reinforce this advice. The requirements as to service of the break clause notice are strictly construed and must be strictly complied with. If the lease requires a particular form of notice, that form must be used- for example, if it specifies that the notice must be on blue paper, then a notice on any other colour paper will not do!

It is therefore extremely important for any tenant considering exercising their break clause to look carefully at the terms of their lease and take advice as to the service of the break notice.

For more information on this subject or any other legal matter,
please contact us:

Tonbridge: 01732 770660
Sevenoaks: 01732 747900
Email: marketing@warners-solicitors.co.uk