Breaking a Commercial Lease? Here Are 4 Ways to Get It Done.
As a small business owner, there are dozens of reasons why you might be interested in breaking your commercial lease. Starting a small business isn’t easy. In fact, it’s one of the most difficult feats you’ll ever accomplish. So many things can go wrong (and right!) that might cause you to need to escape your lease early. If you find yourself in this predicament, what’s a small business owner to do? The good news is that you have options. Here are just a few to consider when breaking a commercial lease.
Option 1 — Sublet Your Space
Subletting your commercial space is a great option for small business owners that find themselves in a pinch. Maybe you’re looking to downsize because you’ve found yourself with more space on your hands than you need. Or maybe you need more square footage. Regardless of the reason, you need out, and you need out now.
But before you look for another business to sublet the space, check your current lease. Not all lease agreements allow for subletting, and laws vary depending on the state. Your landlord will most likely need to approve your subletter and will want to meet them. It can get a little tricky. We recommend that you work with a lawyer to draw up a sublease agreement.
Option 2 — Consider a Lease Assignment
If you’re looking to wash your hands completely of your commercial space when breaking your lease, this is a good option to explore. Again, check your lease to see if this is a possibility. Like subletting, the laws regarding lease assignment also vary state to state. Do your homework before finding a new tenant.
Option 3 — Consider Downsizing
If you’re looking to save some money or have realized that the space you have is just too large for your store, then downsizing your retail business and leasing a smaller space within the same building can be a good move. Your landlord might be frustrated to have to fill a larger commercial space, if you’re a solid tenant, they’ll be happy to keep you in the building. Though this won’t technically alleviate you from a lease commitment, it will leave you with a smaller monthly expense.
Option 4 — Request an Early Termination
If you’ve ever negotiated and signed a lease — even on just an apartment — you know that it’s a binding contract and you can’t just up and decide you’ve stayed long enough and leave. At the same time, however, some landlords are open to negotiating early lease terminations. Often they see that allowing you to break your commercial lease is in their best interest, especially if they are concerned that you don’t (or won’t) have the funds to make good on your original agreement.
In the end, there is no one-size-fits-all way to break a commercial lease. Depending on your business, the type, the size, and the immediacy of your situation, how you free yourself from the bonds of an inconvenient lease may be significantly different than your neighbor down the street.
Thank you to Sara Sugar, ShopKeep point of sale’s in-house Content Marketing Specialist for this contribution to the SmartBiz Small Business. Sara uses her distinguished journalism background to boil down topics like POS system technology, payments, and payment security for small business owners.
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