How can a Lease be terminated?
1. The lease could be surrendered if the landlord and tenant mutually agree. The tenant cannot simply vacate and hand back the keys.
2. Forfeiture is a right to end a lease by a landlord. When exercised it operates to bring the lease to an end earlier than it would naturally end. Usually the lease is forfeited because the tenant has breached a condition of the lease such as failure to pay the rent.
3. The landlord may terminate a tenancy by serving a ‘notice to determine’ on the tenant in accordance with the timescales noted in the The Business Tenancies (Northern Ireland) Order 1996.
4. The tenant can make a request for a new tenancy in accordance with the said 1996 Order.
How much notice must be given?
Check the lease to see what period of notice must be given and when. In the absence of any guidance within the lease, The Business Tenancies (Northern Ireland) Order 1996 should be consulted. For example, if the landlord is terminating the lease by way of a notice to determine then the landlord must serve this notice on the tenant not more than 12 months or less than 6 months before the termination date. If a tenant wishes to request a new tenancy then the request should be no earlier than six months nor later than 12 months from the date of the request.
A break clause is an option in a lease for a fixed term which gives either or both tenant and landlord the option to determine before the expiry of the fixed term. For example, a 10 year lease might contain an option to break the lease after 5 years.
You need to check what period of notice must be given, when it must be given by and on whom and by what method the notice must be served. If these are not observed then the right to break will be lost.
Often, the right can only be exercised subject to conditions being fulfilled such as the payment of rent being up to date and the condition of the premises being in accordance with the lease.
Assignment of the Lease
Instead of ending the lease it may be possible for your business to sell or assign the lease to another business. Such assignment will require the consent of the landlord. Often such consent cannot be unreasonably withheld by the landlord but the criteria often used by landlords include the suitability of the proposed new tenant.
Covenants to repair contained in the lease vary greatly and may be one of the following which have different meanings and hence obligations:
- “keep in repair” may mean put in repair
- “yield up premises in good repair”
They each refer to the condition of the Premises which the landlord expects the tenant to leave the premises in, at the end of the lease.
A lease might require the removal of fixtures and making good any damage or simply to redecorate.
A Schedule of Condition with photographs ought to have been prepared and agreed at the beginning of the lease to avoid disputes at the end of the lease.
Options to repair are either to do the work or pay for the work to be done by the landlord’s contractors (often at much greater expense).
In summary, check the terms of the Lease for
- A Break clause
- Conditions of exercising break
- Repairing obligations
- Notice periods – time being of the essence
If you have any questions which arise from reading this blog, please get in touch with Cathal Murray at firstname.lastname@example.org