Tanya S Osensky
How I Help: Commercial Leases & Early Termination
David’s marketing firm was a year into a long-term office lease when he felt like breaking the lease was his only option. The problem was that his landlord refused to let him leave or sublease his space to another tenant.
The potential for dispute in a commercial lease could result from many things; but most landlords and tenants focus on negotiating rent and other economic matters. As a result, many important issues are often overlooked or under-negotiated.
An early termination option is one such clause. Having it would have given David the flexibility to walk away, which he would have been willing to pay for.
David finally got the landlord to agree to a buy-out of his remaining term, but it cost him a lot more than if he had negotiated it up front, when he had all the negotiating power.
Do you know where you plan to be a year from now? Chances are, you don't know for sure. Building flexibility into contracts is a great way to prepare for what can't be foreseen.