How Damaging Can Breaking a Long-Term Lease Be?

Place yourself in this scenario: You are a budding company that recently hit its big break in its market. The cash is coming in and your management team is ready to expand its employee base and invest in new equipment.

Then you realize that your office space is just not big enough to hold all your new purchases and employees. Worst of all you have 7 months left on your long term office lease.

What do you do? Do you just break the lease and move on? Would this move be a threat to your company’s well being?

Here’s a look at the damage that can be caused by breaking a long-term lease and how we can help you avoid this sticky situation in its entirety with short-term office leases.

Fees Can Be Astronomical

Any lease will have an appropriate timeline for termination. However, if a renter simply terminates a lease outside of that window, the costs can quickly impact a business’ finances.

Depending on the early termination clause in your contract, the cost of an early termination can be a few months to a year’s worth of base rent, on top of standard CAM fees.

In an office setting this can easily set back a business by several thousands of dollars. As a growing business, this could actually be enough to leave you out of commission for quite some time.

You Could Have Issues Finding A New Workspace

There should always be a connection of trust between a management team and the business it leases office space out to. In fact, starting a relationship off right is the whole purpose of a general background check on tenants.

Even one broken lease is a huge red flag to a landlord. So, despite the circumstances behind you needing to break the lease, you could still have a hard time convincing a new management team that your commitment is worth its weight in gold.

Your Credit Can Get Damaged

Keep in mind that terminating a lease isn’t the act that can ruin your credit. It’s avoiding the financial responsibilities of an early termination that can cause long-term financial damage.

So, if you do plan on terminating a long-term lease early, at least review your early termination provisions in the contract. This can help reassure you that you can afford to make such a bold move.

You Could End Up in Court

A lease is a legally binding contract. So, should your exit be enough to push your former landlord to a lawsuit, it’s definitely something they can enact.

However, most terminations that result in court are usually due to tenants that leave their contract open, thinking that their statement of termination is enough to stop paying what they owe.

Regardless of your desire to leave, you must always pay any associated fees and abide by any early termination stipulations that surround your lease.

Experience the Freedom of Short-Term Leases at St. Paul Place

If you are the owner of a startup that knows your business is on the fast track of growth, don’t box in your expansion potential with a long-term lease. At St. Paul Place, we believe in offering flex suites to our clients that encourage future growth.

Our short-term leases make professional change easier and take out the breach of contract threat from the rental equation. A short-term lease with St. Paul Place can be as brief as a few days and as long as a few months.

Regardless of how long your contract is with us, you are guaranteed the high quality office amenities and access to pre-furnished offices that will make your time with us a comfortable and professional experience.

Contact us today and learn more about our available units and how our contracts are built with change in mind.

We’re ready to have our office space be your brand’s home base.