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When may commercial real estate leases end before expiration?

The terms of your rental agreement may describe under which circumstances parties may break the contract. Terminating a commercial lease early, however, could result in legal consequences. To help avoid a potential legal action, you may wish to include early-termination provisions when first discussing a lease.

Florida’s statutes allow commercial property owners to evict tenants when they do not pay rent. Landlords, however, must provide tenants a 3-day written notice to vacate, according to the Florida Legislature’s website. If a lease specifies penalties for paying late, tenants must include them with the outstanding balance.

Terminating a lease after a business fails or sells

As reported by Millionacres, a business closure could result in a tenant seeking to sever a lease agreement before it ends. An unexpected financial hardship, for example, may alter a tenant’s ability to maintain the property even with a track record of paying rent on time.

Sudden changes in market conditions could result in other expenses taking priority. If a business closes or transfers to a new owner, a tenant may lose the security deposit. An agreement may also include an early-termination clause. In some cases, a landlord may seek relief for the cost of removing fixtures or finding a new tenant.

Severing an agreement with a force majeure clause

Some commercial leases may contain a force majeure clause to address catastrophic events. Natural disasters such as hurricanes occur outside of anyone’s control. Because unforeseen calamitous events may affect a tenant’s ability to meet a rental agreement, a force majeure clause may provide a way to end a lease.

Commercial tenants and landlords have the right to end their agreements. In some cases, tenants may terminate a lease with high fines. Property owners could also have an unexpected vacancy during a difficult time. Addressing these issues before signing an agreement may prevent legal action.

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