Breaking a lease? - Posted by John

Real Estate Investing
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Posted by SteveO on April 19, 2009 at 07:28:27:

The person on the other end of the lease wants to be paid by the contract. You need to figure out how to make that happen. If you walk away, the owner is going to try and collect from you.

At some point you could start talking with the owner about the situation and work with them on a remedy.

You really should review the terms of the lease in detail and discuss them with an attorney.

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Breaking a lease? - Posted by John

Posted by John on April 16, 2009 at 23:14:27:

Hi,

I was wondering if I could get some advice from some of you. I opened a business a year ago and signed a 5 year lease. Is there any way to protect myself from this lease if I go out of business? I would appreciate any advice if this scenario were to happen.

Thanks…John

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Re: Breaking a lease? - Posted by Richard

Posted by Richard on April 20, 2009 at 20:54:17:

I am sure the practice varies by locale, but in my experience it is fairly common to negotiate your way out. Unless you are a National tenant, or in Class A space, three to six months worth of base rent is what I have seen. Set up a meeting with your Lessor, and lay out your past two - three years financials, presumably showing a decline in income. Discuss cost-cutting measures you have taken, etc. See if he is willing to offer a reduction, or moratorium on increases, or ??? If you have been a good tenant, HE doesn’t want empty space now any more than you want to get out. Negotiate. It’s just Business.

Be assured however, if you sneak out in the middle of the night, or fail to TALK, he will have every right and expectation to go after you Personally with that guaranty. That’s why it’s there unless you are the aforementioned National or Class A type of tenant.

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Re: Breaking a lease? - Posted by SteveO

Posted by SteveO on April 17, 2009 at 09:08:53:

If you signed personally for the lease and are responsible then your best course of action might be to find another tenant. Rents are softening in many locations so unless you have a great rate, you may have trouble with this method.

If your business closure is imminent, you could talk to the manager/owner to see if you could come up with a joint plan.

In any case, you should talk to an attorney to review your options.

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Re: Breaking a lease? - Posted by SteveO

Posted by SteveO on April 17, 2009 at 09:01:36:

Did you guarantee the lease personally?

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Re: Breaking a lease? - Posted by John

Posted by John on April 18, 2009 at 07:48:44:

Hi Steve,

Thanks so much for the response. Yes, I did guarantee the lease. I didn’t see how I could have gone around it? What options do I have?