Specify You’ll ‘Abandon’ Not ‘Vacate’ Space

October 17, 2013
| Share | Print

If you and the owner of the space you lease agree that giving up your space prematurely will trigger a lease default or another lease obligation, such as the payment of an early termination fee, be careful how you word the agreement in your lease. If you don't draft your lease properly, a common error can leave you in a much worse situation than you bargained for, say commercial real estate leasing experts.

If your lease states that a default or other lease obligation will be triggered if you “vacate” the premises early, you need to meet only one requirement—that is, you must actually move out—to trigger the default. So even if you plan on reopening, you could accidentally trigger a default or lease obligation. If you move out but intend to return to the space, the owner can claim—and a court may agree—that you've violated the terms of your lease.

To avoid this problem, draft your lease so that it states that you'll trigger a lease default or another lease obligation only if you “abandon” your space. To abandon a space, you must meet two requirements—you must actually move out and not intend to return or continue operating your business in the space.

Not a subscriber? Click here for a free trial issue!