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My
business is growing so fast that our space is already
too small — and we just moved in! What's the best way to
get out of a lease I no longer
need?
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The
most common method for getting out of a lease obligation
is to sublease the space to another tenant. In order to
sublease the space, however, your lease document must
have a clause allowing for it. But beware, subleasing
does not relieve the original tenant of obligation in
the event the subtenant defaults. And landlords usually
require the right to approve the subtenant based on
reasonable terms.
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Another common method for relieving rental
obligations is to buy out of the lease. This method
requires the tenant to pay a negotiated lump sum to the
landlord. This sum is calculated by discounting the
future value of lease payments and then recapturing the
unamortized portion of commissions paid as well as the
value of tenant improvements. The buyout price is most
often significantly less than the total of the remaining
payments on the lease. Buyouts protect tenants by ending
liability for the lease. For landlords, buyouts cover
the sometimes significant vacancy costs during the time
needed to find a new tenant.
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| In addition, make sure to read these
articles: |
| ● |
Questions
to Ask Before You Sign a Commercial Real Estate
Lease |
 |
Can I Get Out of a
Commercial Lease? |
| ● |
Securing
the Right Amount of Space for Your Growing
Business |
| ● |
Understanding
Lease-Renewal Options |
| ● |
Advantages
to Leasing Your Office Space |
| ● |
Breaking
a Business
Lease |
