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Commercial Leases - 3 remedies for early termination in Florida

Florida Commerical Leases /Rental Agreements -In a recent post, we discussed 'Go Dark ' clauses and how they can affect commercial tenants and landlords. We explained that these clauses allow a tenant to cease operations without losing commercial space. As beneficial as this might be for tenants, it can cause headaches for commercial landlords who know that closed businesses can be bad for nearby businesses.

In this post, we will discuss the remedies that could be available when a business closes and wants to end a lease early, rather than holding on to the space. 

Negotiating a financial agreement

In many cases, commercial tenants and landlords can work out a financial agreement that allows the owner landlord to recoup some money and the tenant to walk away from the lease. This is often an option when a landlord is confident that the space won't stay empty long. 

Forcing a company to stay open

Seeking a court order that forces a company to stay open and fulfill the terms of a lease is very unusual, as it can present a number of problems for both parties. However, it is not unheard of. In fact, this is what Simon Property Group is asking the courts to order in its lawsuit against Starbucks, who recently announced it is closing all 379 of their Teavana stores. 

The lawsuit claims that Starbucks is far from financial despair and argues that mass Teavana closures would affect the balance and reputation in Simon malls across the country.

Enforcing early exit clauses

One of the most amicable, simple ways to exit a commercial lease early is to ensure there is a clause in a lease allowing the tenant to do so. In Florida, leases can contain clauses that assign an early termination fee. This might also be referred to as "liquidated damages."  Liquidated damages is a fancy way of saying that the parties have agreed in advance to a dollar figure or a formula for determining the money losses one party suffers when the other breaks a contract. This saves the contracting parties the expense of litigating to establish that amount. 

In other words, with an early exit fee, a tenant can break a lease as long as he or she pays the fee and gives the appropriate notice as specified in the lease.

[TIP: Do NOT rely only on phone calls, texts or emails to give notice. Always send a signed letter and do so by more than one delivery method. The contract may have specific notice requirements].

Ending leases early demands legal support

Whether you are a tenant or landlord of commercial space, it is critical that you understand your rights and your options in the event that early termination of a lease becomes an issue. With the advice and guidance of an attorney, you can take the steps necessary to mitigate financial consequences and protect yourself and your company.

If a dispute has arisen or litigation threatens, call us sooner, rather than later.  As the old saw goes: 'A stitch in time saves nine.'

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