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Are you in the middle of your contract and want to understand the options that are available to you to reduce your costs?

In the middle of your contract and want to understand the options that are available to you to reduce your costs? We’re happy to review it for you - free of charge. You can find an overview of typical clauses that you might find in your contract below.

Break Notice: A break notice is a formal notification that either the tenant or the landlord / fully-managed flexible office provider wishes to terminate the lease / licence. Your agreement will dictate if the tenant or landlord has the ability to do this and typically breaks are at specific dates, and tenant only. Break notices have to be served in the correct form and at the right time to ensure the right is successfully exercised.

Forfeiture clause: This clause enables the landlord to re-enter the property following a tenant breach and terminate the lease. Reasons for forfeiture could be if the tenant fails to meet their rent obligations. The procedure to follow depends upon the nature of the tenant’s breach. If the tenant has failed to pay rent then generally there is no need to serve a preliminary notice.

Surrender: A tenant or a landlord can terminate the lease early by mutually agreeing to a surrender. A lease is surrendered when the tenant’s interest is given back to the landlord and both parties accept that it will be terminated. The key requirement is an unequivocal act which shows both the landlord and tenant accept that the lease is at an end, such as the landlord granting a new lease of the same premises to a third party at the request of the original tenant. Often a premium will be paid by the tenant (or the landlord depending on the prevailing market conditions) to surrender the lease.

Alienation rights: Alienation rights are a provision in the lease dictating a tenant’s right to assign or sublet their office space. Typically, subject to a landlord’s prior consent (not to be unreasonably withheld or delayed), a tenant should be able to assign or sublet their premises as a whole. Depending on the size and layout of the premises a tenant may also be able to sublet the premises in part i.e. on a floor-by-floor basis or part(s) of a floor.

Assignment: Assigning a lease is a complete transfer of the right to be the tenant under the lease. The third-party assignee becomes the new tenant under the lease, taking over all of the rights and obligations of the lease. Sometimes the tenant assigning the lease will be obligated under the alienation provisions to guarantee the new tenant’s lease via an Authorised Guarantee Agreement (AGA), however you would expect this only to apply ‘where reasonably required,’ if a tenant is assigning its lease to an entity with stronger finances a guarantee may be considered unreasonable.

Sub-lease: When subleasing, a tenant will lease part or all of their leased premises to another ‘sub’ tenant. In this scenario the original tenant retains some right or interest under the original lease. The original tenant will still be bound by the obligations of the head lease such as the obligation to pay rent, damages and to keep the premises in repair. The general terms of any sublease will need to mirror those of the head lease. Typically controls over the subletting process are written into the original lease so that the owner has some control over who uses their property and at what rental level.

Do you need a second opinion or some support reviewing your contract to understand where you stand? Our experts are to hand, and if required, we can lean on our friendly legal partners.

Beyond what’s stated in your contract, we always encourage you to open up a dialogue with your landlord or fully-managed flexible office provider. They might allow you to downsize with no penalty, have a conversation around your rent / rates or have enhanced flexibility on start dates if it’s a space you’ve recently committed to.

We are by your side to encourage this conversation and happy to organise and attend any calls with your landlord / provider. You can contact us at anytime to talk through your options, or find the answer to more questions here.

Want to know more?

Let's chat! You can call us on +44 020 3770 4279 or email hello@kontor.com

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