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A break clause is a provision in a lease which enables either party (or both) to terminate the lease early. Our Property Litigation Team looks how to exercise this clause and the usually very specific terms you need to adhere to.
When can a break clause be exercised?
The right to break a lease term may arise on one or more specified dates or be exercisable during any time during the term.
Is there a standard clause dealing with break clauses?
No, they are individually negotiated by the parties at the time the lease is granted. The precise wording of the break clause needs to be correctly read and interpreted in order to know the circumstances when a break clause can be exercised.
Can there be pre-conditions to exercise of a break clause?
Yes. In fact, this is very common. Again the conditions can be individually tailored to the parties at the time the lease is agreed but often there will be a condition included that the tenant is fully up to date with all rent and service charge payments.
How is a break clause exercised?
Normally the break clause specifies the form of notice which must be served on the other party and the break clause often imposes specific requirements as to the method of service. These need to be precisely complied with. This was classically illustrated in the leading legal case on the point Mannie Investment Co Limited v Eagle Star Life Assurance Co Limited (1997 Appeal Court 749), where Lord Hoffman stated that: "If the notice clause had said that the notice had to be on blue paper it would have been no good serving it on pink paper....".
Is the time the break notice is served important?
What are the typical conditions imposed before a break clause can be exercised by a tenant?
How do I know if my lease contains a break clause?
My lease does have a break clause but it is not exercisable yet, what should I do?
Who should serve a break notice?
The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.