Give me a break, Landlord!
Difficult economic climates usually breed disputes between landlords and tenants of commercial properties over whether a tenant should be allowed to get out of a lease early. A break clause is a term in a lease which allows a tenant to terminate a lease and vacate, without penalty, before the full term of the lease expires. Landlords who understandably want to avoid a vacant unit on vacation by tenants seeking to exercise such break clauses often try to keep the tenants in by not accepting the validity of a tenant's attempt to exercise a break clause. Typically, difficulties for tenants frequently arise where an option in a lease to break is made conditional upon the compliance by the tenant with covenants in the lease.
A recent case shows a landlord's attempt to make life difficult for a tenant trying to exercise a break clause backfire. In this case the landlord alleged the break notice was defective because the tenant had not paid insurance premiums prior to the exercise of the break clause. The lease required the tenant to pay all such arrears before the break clause could be exercised. The lease required the tenant to pay "such yearly sum or sums as the landlord may from time to time expend” in insuring the premises. The court decided that this meant that the insurance could only be demanded of the tenant once the landlord had paid for the insurance. In the particular case in question the landlord had sent the tenant an invoice for insurance before the landlord had actually paid the insurance. The demand for insurance was invalid and the landlord was unable to prevent the tenant from validly exercising the break option. The landlord had to give the tenant a break.
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