What Happens If You Walk Out on a Business Lease?
After you sign a commercial lease for your business, it is not easy to get out of it without some repercussions. Commercial leases are binding documents that typically have a lot of money involved for both the tenant and the landlord. However, if you desperately need to get out of your lease, you can do so and try to minimize the financial consequences.
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Early Termination Clause
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In many commercial leases, the landlord will include an early termination clause. This is a clause that allows the tenant to leave the property before the lease has expired. With an early termination clause, the tenant can usually leave for any reason, but some type of financial consideration will have to go to the landlord. For example, you might have to pay for six months of rent when you move out. Some leases include a specific dollar amount for a penalty.
Liability for Lease
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If the lease does not have an early termination clause, you can simply walk away from it. However, if you use this option, you will still be liable for the lease and the rent due to the landlord. You will still be legally liable for the rent every month until the lease expires or until the landlord finds a new tenant that is willing to pay the same amount. If the landlord finds a tenant that is willing to pay less, you will be responsible for the difference.
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Lawsuits
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If you move out of the property and simply stop paying your rent, you could face some legal action from your landlord. The landlord has the right to sue you for any money you owe him. If you signed a lease, this will also be very hard for you to fight. At that point, the landlord can get a judgment against you from the court, which will allow him to collect through a garnishment, levy or payment plan.
Subletting
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To avoid the financial problems that often come with walking out on your commercial lease, you may want to explore subletting. Subletting is a process in which you rent out the property to another tenant to cover your rent payment for you. When you sign your original lease, there may be a clause that allows subletting. If not, you can always ask the landlord if subletting would be allowed if it kept the rent payment coming in each month.
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