Operation of a Break Clause
It is possible for a Tenant to negotiate for the inclusion of a Break Clause in a new Lease. This would allow the Lease to be ended before the expiry of the initial term, provided various criteria are met. A Break Clause can either be a Tenant only option (only the Tenant can break the Lease) or a Mutual option (either party may break the Lease). This clause must be present in the Lease when first granted, for a party to be able to take advantage of the option to end the Lease early.
The wording included in a Break Clause, and the timings specified are key in its successful operation. The clause will specify the exact timescale in which the notice to operate the Break Clause must be served, and if a notice is served too early or too late, the Break Clause will not be operated. There are also requirements for rent and service charge to be paid up to date, as at the earlier date the Lease will end. Sometimes, the obligation for rent and service charge to be paid up to date extends to when the notice is served. Tenants must ensure they adhere to these obligations, otherwise the notice to break the Lease will have no effect.
Some Leases also include obligations for the Tenant to have complied with their repairing and decorating obligations at the date the Lease will end. These tend to be older style Leases and will not be found in more modern drafting. There is always an obligation for the Tenant to vacate the property by the date on which the Lease is to end, and this will include an obligation to leave the property in the state and condition required by the Lease. A Landlord will still have the option to prepare a Schedule of Dilapidations, and pursue the Tenant for wants of repair, even if the Lease is ended early via a Break Clause.
It is often the downfall of a Tenant to partially comply with the provisions of a Break Clause, and not every requirement. This can be catastrophic to a Tenant, as they may then be tied to the property for several more years. Break Clauses are very specific and require attention to detail to ensure absolute compliance.