Breaking Up Is Hard To Do - Make Sure You Exercise Your Break Option Successfully

Author:Ms Alison Crabbe
Profession:Charles Russell Speechlys LLP
 
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More and more pharmacists are requiring greater flexibility in their leases and, increasingly, are seeking to exercise break options particularly if they need to relocate their business (eg if a doctors' practice moves).

Break clauses are very difficult to comply with and numerous cases highlight just how difficult it can be for tenant pharmacists to successfully break a lease.

If you are planning on terminating your pharmacy lease early, beware the potential traps and take advice early.

The terms of a break clause must be complied with strictly. Points to watch include:

THE BREAK NOTICE

You will need to serve a break notice on your landlord confirming your intention to break.

Your break notice must reflect the break clause requirements precisely. As one judge famously said "if the clause had said that the notice had to be on blue paper, it would have been no good serving it on pink paper".

Make sure you know who your landlord is. Make checks at the Land Registry and the latest rent demand.

Check also that you have the right to break (is it a personal right?).

Serve the break notice in the way the lease requires. If your lease says service is by hand, service by post will not be good enough. Keep evidence of the method of service and request an acknowledgement of receipt.

Time is of the essence when it comes to break clauses so the notice must be served in good time.

Watch out for any pre-conditions which require compliance at the time of serving the break notice as well as at the break date.

Remember, always comply with the wording of the break clause. In a recent case a break notice was invalidly served because the lease required the notice to be written so it was given under Section 24 of the Landlord and Tenant Act 1954 and the notice did not contain those exact words.

BREAK PRE-CONDITIONS

Break clauses often contain pre-conditions to the break. It is easy to fail to comply with these conditions as any minor failure to comply will invalidate the break. Common pitfalls include:

RENT

The lease will often require the tenant to pay rent "up to" the break date. If the break date falls between two quarter days you should still pay the full quarter's rent as rent is usually payable quarterly in advance and not for part of the relevant period (unless the lease says so).

There should be an express refund clause in the lease, as otherwise you cannot recover any overpayment made.

LOOK OUT FOR "ALL SUMS DUE" CONDITIONS

These conditions require...

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