Ideally, a break clause should be capable of operation without any fetter. The landlord friendly break clause makes its operation conditional on compliance by the tenant through obligations under the lease.

This means, for example, the tenant must have complied with repairing and redecorating obligations in order to be able to exercise the break.

The tenant serves notice to break and duly vacates, believing that his ongoing obligations have ceased. The landlord takes the view that the tenant has not complied with the terms of the lease and refuses to accept the break.

That means that the tenant has expensive premises that he does not want. If the balance of the term after the break is two years and the rent is £19,000 per year, the tenant must pay the rent of £38,000 unless he can negotiate a settlement with the landlord or assign its interest to a third party.

If the market is quiet, the landlord may negotiate a settlement but only on the basis of a substantial sum or insist that the tenant tries to find someone else to take it.

The landlord’s view is that why should he risk a period without any rent being received?

The best way for the tenant to protect his position is to deal with these likely issues at the time that the lease is created. The tenant must ensure that the break provision is unconditional. He will still have to comply with the obligations in the lease as to repair and redecoration but at least he will be able to operate the break without being liable for unexpected rent.

If that has not been achieved then the next best approach for the tenant is to start discussions early with the landlord about the anticipated break. There is, however, no obligation on the landlord to negotiate. If he wishes, he can merely do nothing and then proceed against the tenant after the break. The tenant is then left with uncertainty as to whether the break has been effectively operated and whether he is free to move on without unexpected claims arising under the old lease.

For more information contact Hugh Ellins on 01793 511055 or hugh.ellins@clmlaw.co.uk