What Happens If You Break a Commercial Lease?
A commercial lease obligates both the landlord and tenant to abide by the terms and conditions put forth in the agreement for a set period of time, usually a year. Breaking the lease refers to leaving a fixed-term lease without paying the remainder of the rent due.
There are a number of potential legal repercussions if you break a commercial lease. You should get astute legal advice from an attorney with experience in both real estate and contract law if you are considering terminating a commercial lease early.
Operational and Logistical Costs of Breaking a Commercial Lease in Alabama
Commercial leases are legally binding contracts, which you cannot walk away from. This is unless you have an agreement with the landlord that allows early termination. You may need to pay the following in addition to the rent due and other leasing costs:
- Termination penalties.
- Cost of finding a new lease and advertising the property.
- Clean-up costs.
- Legal costs if an agreement cannot be reached with the landlord.
- Any costs mentioned in the early termination clause.
How to Break a Commercial Lease Legally in Alabama
The first step to take when you want to end your commercial lease is to read the agreement. You need to look out for early termination and bailout clauses, which allow you to leave the premises if sales are low. Co-tenancy clause is another helpful clause that can allow you to break the lease legally. This is when the occupancy drops below a pre-set level or the anchor tenant leaves.
Commercial leases set in popular areas can usually be terminated early without any hindrance since the landlord can find another tenant quickly. This is especially if the landlord gets a higher rate for the space or you offer a lump sum payment for terminating your obligations.
These are a few other legal reasons to break a commercial lease:
- You are bankrupt.
- Your landlord breached a lease provision.
- You and your landlord have agreed to early termination. You can enter a deed of surrender that releases you explicitly from all your lease obligations.
- You are allowed to assign or transfer the lease.
- You have a break clause or a termination clause in the agreement.
- Your landlord has allowed you to sublet the property.
When Can a Landlord Break a Commercial Lease in Alabama
Contract law legally binds lease agreements in Alabama. Based on this, it can be broken under certain circumstances. You and your landlord should both sign an agreement if you decide to break the lease early, to protect against future legal action. Commercial landlords are allowed to break the lease in certain circumstances without the tenant’s agreement:
- Tenant doesn’t pay rent on time.
- Tenant damages the property or doesn’t take care of it.
- Tenant violates the terms of the lease agreement.
The Landlord and Tenant Act of 1954 provides tenants with an added security of tenure. You should speak with an attorney immediately if your landlord is terminating the lease early without your consent. Landlords can refuse to renew commercial lease agreements under certain situations:
- Breach of contract.
- Landlord offers another suitable property.
- Sub-tenant has leased a part of the building when the landlord wants to lease the entire building as one unit.
- Landlord plans on rebuilding the building.
- Landlord plans on using the building for their own use.
Evicting a Commercial Tenant in Alabama
Landlords can evict a commercial tenant for numerous reasons. Moreover, Alabama laws protect a tenant’s rights. Your landlord can only evict you if you violate the terms of the lease or do not pay rent. Landlord will need to provide the following to evict a commercial tenant:
- Provide the tenant with a notice of eviction.
- Landlord can file a complaint in court when the notice expires.
- Issue a summons to commence the eviction process.
- Tenant needs to respond to the summons deadline.
The court may order an eviction if the tenant doesn’t respond to the deadline on the summons. You need to be fully informed of all consequences of breaking a commercial lease. Don’t forget to seek advice from a commercial real estate attorney.
Showing That a Landlord Broke the Terms of Commercial Lease
You may have a legal reason to move if your landlord fails to satisfy any terms of the lease. You can show the following to break the lease:
- That your landlord failed to make the needed repairs that compelled you to break the lease.
- You gave the landlord a written demand for making repairs, which they were supposed to make under Alabama law. Landlords get 14 days in Alabama to make non-emergency repairs. You need to keep a copy of the letter. You can turn in the key when you move if the landlord doesn’t make the necessary repairs.
You should take pictures that prove the landlord failed to make the necessary repairs. This can be useful later on if the landlord brings any legal action against you.
Talk to a Skilled and Knowledgeable Real Estate Attorney – Book Your Consultation Today
Breaking a commercial lease can lead to significant legal complications and financial costs. Our highly rated real estate attorneys at BHM Law Group can help you prevent making any costly mistakes while making sure your rights according to the terms and conditions of the lease are fully protected.
We have also helped numerous tenants and landlords identify clauses within the lease agreement as well as utilize legal interpretations that might allow them to break a commercial lease legally. We are happy to provide you with a complimentary consultation. Call us at (205) 964-9764 or reach us online.