There have been a number of recent high profile cases dealing with tenant break notice conditions such as the payment of rent and delivering up vacant possession. However both landlords and tenants must equally ensure that the basics are covered if they wish to successfully exercise a break option.

Break options come in a wide variety of guises, they can be rolling, once and for all or linked to anniversary dates. They may also have set conditions which must be complied with, such as the payment of rent, substantial compliance with covenants, penalty payments and vacant possession, all of which may require satisfaction at the time of service of the break notice, on the break date or both.

A significant number of break options fail, not because of the conditions attached to them, but owing to issues with the basic requirements of drafting and service of the written notice that are prescribed in the lease. In simple terms, for a break option to have been validly triggered a break notice must:

  • Have been served upon the correct party - due diligence / verification checks should be undertaken as well as checking the obligations in the lease;
  • Be in the right format – some leases go as far as to include a form of notice that must be used or specify exact wording that should be set out;
  • Give the right period of notice - caution is advised here as the lease may contain complex timing calculation provisions; and
  • Be served using the appropriate service method – examples would include by hand or by fax (some leases still contain a fax number for service!).

It is therefore critical that the party wishing to exercise a break right seeks early legal advice to ensure that the requirements of the lease are fully understood and complied with, and to avoid costly errors.