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What to do if a tenant breaches a commercial lease

By Greg Bell

No commercial property owner wants to get into a situation where they have a tenant break their lease and move out unexpectedly, but it does happen with some frequency. While such an agreement will typically have a designated end date, there can be any number of reasons why the tenant may need or want to vacate before that time.

When such an issue arises, you need to know your rights and see if you can come to a reasonable arrangement with your tenant. Rose Lawyers & Conveyancers notes that a lease may be broken when simple terms of the agreement are broken, which can result in the lease being terminated altogether. That may not be an ideal scenario but it is sometimes a necessary one.

In these cases especially, it's important to have a lawyer who can discuss your options with you and help you find the best possible outcome, and that might be particularly important in the event of a tenant needing to break the lease due to financial hardship.

Understanding the situation

When tenants simply can no longer afford to pay rent for your building, then you are dealing with an issue that most likely hasn't come up overnight which means you may have plenty of time to come to a new arrangement, according to MyBusiness. Whether that's allowing them to move out early at an added cost or finding a new tenant to take over the existing agreement, there are options to consider.

However, if tenants want to break the lease for other reasons – such as dissatisfaction with the property itself – that may require a different course of action that you should consult with your lawyers about.

What costs are you able to claim?

Depending on the situation, early termination of the lease may leave a tenant liable for the costs you face when it comes to finding a new tenant. According to Choice, these could include the cost of rent until the new tenant moves in, advertising for the property until it's filled and so on. In some parts of Australia this might all fall under a "break lease fee" that has been agreed to beforehand.

When you need help navigating the complicated world of commercial property, it helps to work with experienced professionals like those at Ray White Surfers Paradise. Give us a call today with any property questions you may have.

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