Terminating a Commercial Lease

The Lease Agreement

In any landlord-tenant relationship, the most important document is the lease agreement.  The lease agreement is the contract between the landlord and tenant that lays out the terms of the lease.  These terms include payment, duties, liabilities, utilities, renewal, conditions, and termination.  To be enforceable, the contract must be signed by both parties and include all essential terms to the agreement.

To read more about term provisions in a lease agreement click here.

Because the lease agreement is a contract, breach of the promises made by either party in the contract can result in termination of the lease.  Typically, there are two grounds for termination of a lease: (1) monetary; and (2) non-monetary.

It is important to note, however, that a lease is a binding contract.  A single party cannot unilaterally sever a contract without breaching the contract.  With regard to termination, both a landlord and tenant cannot individually terminate a lease without the other’s consent.  To have legitimate grounds for termination, a landlord or tenant must breach the terms of the lease agreement in some way.

Monetary Grounds for Termination

Monetary grounds for termination include failure to pay rent, taxes, cost of repairs, improvements, etc.  Usually, the most common ground for termination occurs when a tenant fails to pay rent to the landlord.  In the event of non-payment, the landlord may have the right to terminate the lease agreement and initiate eviction.  Failure to pay rent does not automatically terminate a lease, and in order for termination to be proper, a landlord must give notice and a time to cure to the tenant.

Why You Should Include It in The Contract

Non-monetary Grounds for Termination

Florida courts tend to disfavor non-monetary grounds for termination of a lease.  This is because the burden for proving that landlord or tenant materially breached the lease is very high.  A party attempting to terminate the lease may be required to demonstrate that the lease agreement was materially breached and that forfeiture of the lease will not reach an inequitable result.

Generally, tenants can terminate a lease if the landlord breaches a covenant in the lease agreement.  This can include a breach of the covenant of quiet enjoyment, breach of the implied warranty of habitability, or other provisions in the lease.

Landlords may have non-monetary grounds for termination if the tenant attempts to assign or sublease the premises.  Similarly, a landlord may also terminate the lease if the tenant breaches other material obligations of the lease such as the tenant not obtaining liability insurance.

Both monetary and non-monetary grounds for termination result from material breaches of the lease agreement.  If you have questions about how to terminate a lease, please contact us.  Our experienced attorneys look forward to assisting you.

 

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