Commercial tenant failed to exercise break clause correctly

The importance of following the correct legal procedures when trying to exercise a break clause in a commercial lease was illustrated in a recent case before the High Court.

The tenant in the case had a ten-year lease on commercial premises that were no longer needed. He decided to exercise a break clause which enabled him to terminate the lease after five years.

The provisions of the lease required that he served notice on both the landlord and the property management company within a specified time frame. The tenant served notice on the landlord as required but failed to serve notice on the management company on time.

The landlord responded by saying that the notice was not effective as it had not been served on both parties as laid down in the provisions of the lease.

The tenant submitted that the notice to the landlord should be sufficient but the High Court ruled against him. It held that the terms of the break clause were clear and so service on the landlord alone could not be considered as effective.

Please contact us if you would like more information about the issues raised in this article.

July 2010

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