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“Breaking” a commercial lease agreement

On Behalf of | Oct 25, 2023 | Real Estate |

A commercial lease agreement is a legally binding contract between a landlord and a business owner. Based on a company’s nature and needs, its unique language outlines the rights and obligations of both parties for a specific period, which often lasts a year.

However, despite their best intentions, some businesses need to “break” or end their lease earlier than agreed upon for countless reasons. They may outgrow their space, lack funds for maintenance or become subject to significant industry changes or market conditions.

The ideal situation is when the lease has clearly defined clauses that allow early release without paying for the remaining rent. Unfortunately, this is not always the case. However, business tenants can still avert potential liability exposure in particular scenarios.

Exceptions to the rule

In Texas, landlords have a statutory right to lock out their commercial tenants who are delinquent in paying full or partial rent, provided they give a written notice.

However, the following exceptions allow tenants to notify their landlords of their intent to legally move out without paying for the entire lease term:

  • Active military duty or receipt of military orders
  • Harassment or privacy violations by the landlord
  • Uninhabitable housing or noncompliance with the state’s health or safety codes
  • Domestic violence by another person in the household or sexual assault within the premises
  • The tenant’s death and the estate representative takes over

When none of these scenarios apply and the tenant still pursues breaking their lease, they may face potential consequences. They may continue paying for their rent until the property is re-leased.

But they must also consider that the landlord has a duty to mitigate damages, which means trying all means necessary to find another tenant. Conversely, it is also possible not to find a suitable replacement despite valid attempts. If negotiations fail, the landlord may file a suit for unpaid rent and recoup legal fees.

In pursuit of a reasonable middle ground

The disruptions caused by commercial lease agreement disputes go both ways. On top of the emotional distress, both parties may experience financial and operational setbacks. However, with all the nuances in real estate laws, claimants and defendants must strategize with a results-driven representative to establish a workable middle ground and prevent further losses.


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