Can you break a commercial lease if your revenue is lower than expected?

Can you break a commercial lease if your revenue is lower than expected?

| May 8, 2021 | Real Estate Law |

As a business owner, you thought that the commercial space you found was ideal. It has turned out, however, that it’s far less attractive than you expected. The foot traffic is lower than you anticipated, and your earnings are much lower than you had dreamed possible.

While you can afford the lease, you want to break it so that you can seek a new location where your business can thrive. Are you allowed to do so?

Have you talked to your landlord?

One thing that experts always recommend is negotiating with the landlord. Tell them what you’re considering, what factors are in play and why you want to break the lease. They may give you options, such as a lower monthly payment or the ability to break the lease if you help them find someone else to take it over. 

Next, take a moment to consider the clauses in your lease agreement. Many leases already include break clauses and termination clauses. Your situation may trigger one of those clauses, allowing you to legally exit the lease with no ramifications. 

If your earnings are so low that you can’t afford the lease based on how much you make, then things can get very complicated. You may feel you have no choice but to break that lease, but your landlord may not want to let you out of it. Understandably, both of you feel convinced of your position, but something has to give. 

No matter which one of these scenarios you find yourself in, you can see why it is so important to know what legal options you have and what steps to take as you seek a resolution.