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It is risky for tenants to break a commercial lease in Arizona

On Behalf of | Jun 28, 2024 | Real estate transactions

Life throws a few curveballs occasionally, making it necessary to end certain working relationships earlier than intended. For instance, you might need to exit a business lease sooner than anticipated.

The problem is that commercial lease agreements are legally binding contracts. Walking away from one before your tenancy ends can have significant repercussions. Learn more before you leave your space outside the terms of your lease.

Reasons for early lease termination

There are several reasons a business owner might need to exit before their lease ends. Here are two common scenarios:

  • Change in needs: Business decline or growth may require an essential space adjustment.
  • Financial difficulties: Economic shifts causing hardship may lead to early lease termination.

You might think ending things immediately in the face of hardship will limit your losses, but that may not be the case. It could end up increasing your losses in the long run.

Risks of early lease termination

Sometimes, landlords can sue tenants who leave a commercial space before the lease term expires. If they win, financial losses could be more substantial.

Potential consequences include court orders to pay:

  • Missed rent and late fees
  • Landlord’s related legal expenses
  • Court costs and other fees

The specific repercussions you may face depend on the provisions in your lease documents. However, most leases include terms outlining the consequences upon a breach by either party, including an early lease termination.

A strategic approach can prevent legal woes, even if you have good cause for leaving your business space early. Having experienced legal guidance can help you find ways to reduce your legal and financial risks.