Break Notices – An Introduction
Over the last few years, landlords and tenants have taken greater interest in the provision of break notices within their leases. Changes in working practices, floor space requirements, shopping habits and restrictions associated with COVID-19 massively changed the commercial property landscape within a short period of time.
Whether you are a Landlord or a Tenant who leases commercial property, with (or without) the benefit of security of tenure under the Landlord and Tenant Act 1954, at some stage, you will inevitably want to terminate a lease, for example when you may want to sell a property, expand your business or you have to make adjustments in times of recession.
The most common way to do this is via the service of a break notice.
On the face of it, serving a break notice appears simple. One might assume you write to the Tenant or Landlord providing notice to vacate a property and subsequently leave at the end of the notice period.
Rarely, is terminating a lease this straightforward. Failure to properly exercise a break clause can be costly and can result in the lease continuing for the remainder of the original term.
This blog is a summary of the key points for tenants and landlords to consider in relation to break notices.
Conditions to Breaking a Lease (for a Tenants)
A break clause within a lease will either have an absolute condition or qualified condition.
An absolute condition is where all covenants listed within the lease must be met prior to the service of the break notice. For example, it may be an absolute condition that before serving a break notice rent must be paid up to date. Another example of an absolute condition could be strict compliance with a specific date upon which any break notice is to be served on the landlord. Regardless of how insignificant or trivial the breach, in the case of absolute conditions, it will render any notice served invalid.
A qualified condition is preferable to a Tenant serving a break notice as the notice will be valid providing the Tenant has materially and reasonably complied with their covenants.
The Notice
If the lease prescribes the form that the notice should take, then it must take this form. This is illustrated well in the case of Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749 where Lord Hoffman stated:
“if the clause had said that the notice had to be on blue paper, it would have been no good serving a notice on pink paper, however clear it might have been that the tenant wanted to terminate the lease”
A notice should include the name of the parties, details of the specific clause and the lease it relies upon, the address of the property sought in possession and the date to vacate the premises.
The break notice should also be served on all successors in title irrelevant of whether they are mentioned within the original lease.
Address for Service
The address provided in the lease should not be solely relied upon even if the original tenant is still in occupation.
Who is the Tenant
When a Landlord is seeking to serve a break notice, it is imperative that all persons known to the Landlord (that may have an interest in the property being repossessed) are served with a break notice. Care should be taken to ensure that each notice is served without prejudice to the other.
Should a Landlord commence possession proceedings or undertake peaceable re-entry against the incorrect tenant, the Landlord could be liable for fines, imprisonment and wasted cost orders.
If you have received a break notice or you are a landlord or tenant considering serving a notice, rhw’s team can provide you with legal advice to ensure that you don’t fall foul of the pitfalls. Please contact one of our Dispute Resolution or Commercial Property team members if you wish to learn more.
call 01483 302000 or email
