Can I Get Out of a Commercial Lease?

The most common method for getting out of a lease obligation is to sublease the space to another tenant. In order to sublease the space, however, your lease document must have a clause allowing for it. But beware, subleasing does not relieve the original tenant of obligation in the event that the subtenant defaults or otherwise violates the sublease terms. And landlords usually require the right to approve the subtenant based on reasonable terms.

Another common method for relieving rental obligations is to buy out of the lease. This method requires the tenant to pay a negotiated lump sum to the landlord. This sum is calculated by discounting the future value of lease payments and then recapturing the unamortized portion of commissions paid as well as the value of tenant improvements. The buyout price is most often significantly less than the total of the remaining payments on the lease. Buyouts protect tenants by ending liability for the lease. For landlords, buyouts cover the sometimes significant vacancy costs during the time needed to find a new tenant.