The lease you signed for your current space may no longer suit you. Maybe you need larger space if you're doing well. Or maybe you find an available location that is less costly than what you're obligated to pay under your current lease. Or perhaps you're going out of business and won't need your current space for the duration of the lease. If your company stops paying the rent, you personally are usually liable for the unpaid balance, as most small business owners are required to co-sign their company's leases. What can you do?
- Early termination clause. This would let you off without any further obligation to the landlord for the balance of the rent. It usually can only be exercised after a certain period (e.g., one year) and requires some additional payment, such as rent for one or several months.
- Co-tenancy clause. If you have a store in a mall and the anchor store closes, you may be entitled to a rent cut or even to the cancellation of your lease.
- Exclusive use clause. If you were assured in the lease that you would be the only tenant in the landlord's property to sell the type of products you do, then the landlord's leasing space to your competitor can be your way out.
- The landlord may allow you to sublet even if the lease doesn't provide for it.
- Your landlord may agree to let you out of the lease entirely. This may occur, for example, if the landlord thinks the space can be re-rented to a new tenant at a higher price.
- Your landlord may allow you to cancel by paying some lump sum. This is called a buyout.