In some instances, a business owner must make the decision to give up its current lease location. Perhaps the business isn’t going as expected and moving to a different location is a better choice. This article discusses possible options for small business owners who want to discontinue their current office space lease contracts.
Discussing your concerns with your lessor will help you to decide your next action.
What is the reason why you plan to terminate the contract? Is it because your business isn’t going as expected and you can’t keep up with your monthly payments?
If the problem is with regards to your lease payments, the best thing to do is negotiate with your lessor. However, if you really think that leaving the space is the best solution, politely request your lessor if it’s possible for you to find a new tenant as replacement.
If your landlord consents to let you go as soon as a new tenant has been found, see to it that all the details about this agreement is put into writing.
Without a written agreement, your landlord may insist that you take on the payment obligations, should the new tenant defaults from the lease. This is why a formal turn-over is absolutely necessary and everything should be clearly stipulated in a new contract.
Sublease the place. What if you landlord refuses to release you from your obligations? In this case, you may request to sub-lease the place instead. Sub-leasing means you will be finding a new tenant to replace you so that monthly payments will be submitted continuously.
Nevertheless, should the sublessee defaults from the lease, you- the first lessee will take charge of the debts. When looking for a sublessee, one of the most important criteria you should look for is credit-worthiness.
Be Prepared to Pay Lease Penalty. Regardless of how your negotiation with your lessor turns out, you should be prepared to pay penalty charges. Your lender may choose to keep the security deposit you submitted at the beginning of your lease term.
The penalty charges that your lender can impose upon you must be stipulated early on when you first signed your lease contract. Make sure that you carefully review your contract with your business attorney to avoid being taken advantage of.
On the hand, whatever penalty is stated in your agreement, you should be ready to accept the consequences for breaking lease before the completion of your lease term.
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About the Author:
Melanie James has spent the last 14 years working with businesses to implement quick, effective and inexpensive changes to their businesses to increase productivity and their bottom line.