Anderson Strathern LLP Home Sectors Practice Areas About Joining News Events Legal Updates Contact Register Client Online Make a payment Break Clause in Leases – Beware! Filter Use as many of the search criteria as you wish to find the article you are looking for Keywords: Sector: -- Please Select -- Banking and Finance Charities Construction, Projects and Engin... Education Energy and Climate Change Family Health and Social Care Local Government Private Client Public and Regulatory Bodies Real Estate Residential property Retail, Hospitality and Leisure Rural Property and Business Technology and Creative Industri... Transport Practice Area: -- Please Select -- Banking Charities Commercial Real Estate Construction and Projects Corporate Corporate for Real Estate Discrimination Dispute Resolution Employment Environment Insolvency and Corporate Recover... Insurance Litigation IP/IT Land Resources Licensing Law Parliamentary and Public Law Planning Private Client Residential Property It is crucial to carefully consider the wording of a break clause before a break notice is served and ensure strict compliance with any conditions imposed on the entitlement to break. 6 May 2014, by Joan Devine On 29 April 2014, Lord Malcolm at the Court of Session decided that a tenant was not entitled to exercise a break option in its lease because it was in breach of the repairing obligation at the date on which the notice was served, although the breach had been rectified by the break date. Scottish & Newcastle Limited was tenant of office premises under two leases at 1 and 2 Broadway Park, Edinburgh. Arlington Business Parks GP Limited was the landlord. The leases expired in 2023 but could be broken on 7 May 2013. Scottish & Newcastle served notice on 3 May 2012. The break clause provided that the tenants required to give twelve months’ notice and not be “in breach of any of their obligations at the date of service of the notice and/or the termination date”. Twelve month’s notice was given. Scottish & Newcastle admitted that, at the date the notices were served, it had not fully performed its repairing obligations under the leases. After the notices had been served, it spent over £1.3m bringing the premises into good repair by the break date of 7 May 2013. The landlord argued that as the tenant was in breach at the date of service of the notice, it was not entitled to exercise the break option. The landlord argued that if the tenant was in breach on either of the dates then it could not exercise the break option. The tenant countered that to lose out on the right to exercise the break option, it had to be in breach on both of the dates. Judgment Lord Malcom decided that he preferred the landlord’s argument – this flowed from the natural meaning of the words in the lease. Beware! This case underlines the importance of considering carefully the wording of a break clause before a break notice is served and ensuring strict compliance with any conditions imposed on the entitlement to break. Further information Anderson Strathern has partners who are accredited specialists in Commercial Leasing under the accreditation scheme run by The Law Society of Scotland. Whether acting for the landlord or tenant, we will advise and negotiate to achieve the strongest position for you. We advise on drafting and interpretation of commercial lease documentation including, in particular, repairs, dilapidations, rent review, transfer of leases and sub-lease transactions. For advice on any of these matters or for further information, please contact Joan Devine or your usual contact at Anderson Strathern. Copyright 2004-2014 Anderson Strathern LLP Legal Disclaimer/ Health, Safety and Environmental Policy/ Privacy Policy