In today's Freedom Friday blog and email newsletter, we're continuing and concluding our series on commercial leases, and I want to talk about one more topic in this area, and that's why you would want to terminate your commercial lease, especially if you're a landlord, but also if you're a tenant.  In today's Freedom Friday blog and email newsletter, I'm answering the question, “Why should I terminate my commercial lease?”

The first and most common reason why you would want to terminate a commercial lease, especially if you're the landlord, is breach of the lease agreement.  The most common reason why a commercial landlord may want to terminate a lease is the tenant's non-payment of rent.  However, this can be a complicated process.  Many commercial leases include notice and grace periods in which the landlord must provide the tenant notice and an opportunity to cure the failure to pay rent before the landlord can start eviction proceedings.  Also, the landlord may have to sue the tenant in court to evict the tenant and recover outstanding unpaid rent.

Another common reason why a commercial landlord would want to terminate a commercial lease, but this is a different type of breach, is unauthorized alterations, or unauthorized usages of the premises.  If the landlord discovers that the tenant has made alterations to the premises which were not authorized, that may be a significant breach of the lease agreement.  Also, even if the alteration was authorized, it may be a breach or grounds for termination if the tenant has altered the premises in a way that violates building codes or zoning regulations.  Likewise, the landlord might also want to terminate the commercial lease if it determines the tenant is using the premises for unauthorized and/or illegal uses, such as illegal manufacturing, distribution, and/or sale of goods; gambling; or drug-related activities.

A third reason why a commercial landlord would want to terminate a commercial lease is for property damage that is either caused by the tenant, or even if the tenant didn't cause the property damage intentional, the tenant was negligent in its maintenance or repairs of such issues.  Common examples of these issues include significant fire or smoke damage, plumbing issues which result in substantial flooding, or structural damage for which the tenant would be responsible for repairing.  Depending on the terms of the lease, the tenant might also seek to terminate the commercial lease if the lease provided that the landlord would be responsible for such repairs, as well.

Commercial leases can also be terminated by mutual agreement of the parties, and for other reasons, as well.  If the tenant is relocating or closing its business, the lease may allow the tenant to seek early termination on those grounds, so long as the tenant gives notice to the landlord and possibly pays an early termination fee.  There could also be a clause regarding vacancy rules in a shopping center for retail tenants.  Lastly, the parties may agree to terminate a commercial lease because of reasons related to governmental eminent domain, sale of the property, or force majeure.

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