Under the current commercial rental market with COVID-19 concerns, many commercial tenants are desiring to terminate their lease because their business income has decreased. Meanwhile, other potential tenants’ business has increased and are willing to lease new and expanding space. Under the current commercial market, rental rates are not appearing to go down. Therefore, commercial landlords are willing to mutually release their commercial tenants and subtenants amicably and in order to secure a new long-term lease with favorable terms.
Commercial landlords should then enter into a Lease Termination Agreement when the parties desire to provide for the termination of the Lease, and the return of the Leased Premises to Landlord, prior to the current expiration date of the Lease. This can also prevent the need for an eviction. In consideration of mutual promises, the parties can agree that in lieu of the original expiration date the Lease shall terminate on a new describe date. The parties can agree that the Tenant shall quit the Premises and surrender and return the Premises to Landlord, “as is” in broom clean or professionally cleaned condition.
The Tenant and Landlord can agree that Tenant shall pay a Lease Termination Fee of a certain amount of money and/or forfeit the security deposit. This payment shall be made to Landlord by a date certain. Upon Tenant satisfying its obligations set forth in the Agreement, Landlord can agree to release, discharge and waive any claims known or unknown, against Tenant. In turn, the Tenant can agree to release, discharge and waive any claims, known or unknown, against the Landlord, its successors, assigns, officers or directors, arising out of or in anyway connected with the Commercial Lease. A board-certified attorney in Commercial Real Estate law can help draft the proper agreement.
The Mutual Lease Termination Agreement can be made for the benefit of and be binding upon, the parties and their respective successors and assigns. The Agreement should explain that it is the final agreement and understanding of the parties and that may only be modified only by a further writing signed by the parties.
If you need an attorney with experience with drafting real estate contracts and handling real estate disputes, call Richard Weaver at The Weaver Law Firm at 713-572-4900.