Commercial Lease Agreement With Option To Purchase In Orange
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A break clause in a commercial lease (also known as 'an option to determine') is fairly common. It allows both parties flexibility if any issues or changes in circumstances occur, and provides the parties with a mechanism to terminate the agreement early if certain criteria are met.
There are many reasons why a Landlord and Tenant may choose to include an “option” in a commercial lease. The most common type of option is one that gives the Tenant the right to extend the lease term, usually for additional — sometimes two or more — terms of equal length to the original term.
A 'break option', 'break clause' or 'option to determine' is a clause in a lease which gives either the landlord, tenant, or both, a right in specified circumstances to terminate the lease before it's contractual expiry date.
Be sure to review the contract in its entirety and consider all written terms and conditions including penalties, renewals, terminations, and extensions when evaluating the lease term. Depending on how the contract is written, the lease term may be determined from the commencement date or possibly the possession date.
A break clause, sometimes referred to as an 'option to determine,' allows either the landlord, the tenant, or sometimes both, to end a lease early. This provides much-needed flexibility in case circumstances change. For example, a business may need to downsize, or a landlord may wish to sell or redevelop a property.
For example, a tenant and landlord may agree to a five-year lease with a five-year option to renew. At the end of the first five years, the tenant is given the chance to continue the lease for another five years. If you think you may renew, be sure to bring up extension provisions with your landlord.
