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A Break For Landlords

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The Court of Appeal has overturned a recent decision on the position of rent payments made before a break clause in a commercial lease has been exercised.

The tenant had exercised a break clause, ending the lease early. It sought a refund of parts of payments it had made in advance in respect of rent, service charge, car parking and insurance charges, which related to a period after the break date
The Court of Appeal ruled that it was not appropriate to imply a term into a lease that entitled the tenant to a refund in respect of payments that it had paid in advance in accordance with the terms of the lease.

Landlords will be relieved by this decision and should ensure that new leases granted do not provide for a refund unless this has been expressly agreed with the tenant.

Tenants should try to ensure that any commercial lease they enter provides for a refund for payments made relating to a period after their lease has ended.

For advice on all commercial lease matters including the effect of break clauses from either a landlord’s or tenant’s perspective, contact the hlw Keeble Hawson Commercial Property team.

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