Can you break your commercial lease if it’s a bad location?

On Behalf of | May 18, 2022 | Commercial and Residential Leases |

When you first saw the commercial space, you thought it would be perfect for your business. You also thought the location would be pretty good and you’d get enough traffic to make it work.

You signed a lease for three years, but you’re only a year in, and you can already tell that it’s a bad location. You simply do not get enough foot traffic. You’re not making enough sales, you can barely pay the monthly rent and you’re sure that the location itself is holding the business back. Can you break the lease or do you have to stay there for the full three years?

Does your lease have a bailout clause?

At a time like this, it’s important to check your lease and see if there’s a bailout clause. Ideally, you considered this when you signed the lease initially and asked for one to be included. 

The way that a bailout clause works is that you and the landlord agree on sales numbers that have to be met. If you don’t meet those numbers, then you can break the lease with no penalty. This is a way to guarantee to you that the location will either be good enough or that you’re free to move. Both you and the landlord will hope that you simply make your sales numbers and it’s not a problem, but it allows you to step away without penalty if that proves to be impossible.

Situations like this can be complex and the future of your business may be on the line, so make sure you carefully consider all of your legal options