Process Of Ending Business Leases

Process Of Ending Business Leases


When you are involved into a fixed term of lease, you may require vacating activities or obtaining the possession after the lease term. During the entire fixed term, the lease can only be terminated if any one of the following happens:

  • Both the lesser and the lessee come to a mutual agreement
  • The lessee has undergone a substantial breach of the lease contract. This is very specific to the lease terms.
  • The lesser and the lessee can use the break clause, if it is present in the contract

Vacate On The Last Day Of The Lease Term:

A lessee generally has two different options if he is staying as a tenant.

The first one is where simply he will move out from the house just before the last day of the lease term. In this case, the lesser will not be provided with a written notice from the lessee. He will vacate the property, return all the keys and will no longer occupy the property, the business lease process can just end here. If the lessee continues occupation even after the end of the term, the occupancy can only be continued under the terms and conditions of the lease contract. In this case, one of the parties will have to take the steps to end the contract.

In case of the second option, the lessee will require serving a notice of section 27(1). Though, there is no prescribed format, it is required in writing. The notice will have to be served minimum of 3 months prior to the expiry of the original term. For example, if the lease contract term is ending in 30th July, then the lessee should serve the notice to the lesser within 29th of April.

Tenure Security, Periodic Tenancy And Hold Over:

Security Of Tenure: The lessee has a security of the tenure by default, unless the lesser and the lessee have contracted out of the sections from 24 to 28 of the Landlord Tenant Act 1954. In these exceptional cases, the lesser can obtain possession by following some rules which is specifically mentioned in the Act. If the lease term crosses over 6 months , or if the occupancy period goes over 12 months , the security of tenure is granted automatically.

Two basic rights are provided to the tenant :

  • Right to be offered with a new lease agreement
  • Right to stay within the property if the term expires with the terms and condition during the specific period

Holding Over And Periodic Tenancy: If the fixed term of the lease ends, it can be termed as the periodic tenancy. It will continue from period to period, where the period can be considered as the time between the lease payments. It can either be monthly or the annual period specific to the contract.

During the periodic tenancy the lessee is said to hold over the following terms until:

  • Both the lesser and the lessee will agree with a new lease and some changes in the terms and conditions
  • The lesser provided a quit notice to the lessee for obtaining the possession

While holding over, both the parties will continue maintaining the terms and conditions in the old lease.

Forms may be required for ending business leases. As the words are laid by the law, the words in the form cannot be changed manually. Generally it contains two main parts, one is the notice and the other is the note for the lessee. The notice will be considered as invalid if the notes are not mentioned along with it. These are the simple processes of ending business leases.

Author Bio : Stuart Johnson is a popular financial expert who works in In this article, he is discussing about the lease ending process in the business.