Protect Your Business From a Commercial Lease Breach of Contract!

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When finding a Dallas office lease for a commercial office location, the landlord will have to provide a lease contract. It is a binding agreement between Dallas_Daytime_Skylinea lessor (landlord) and a lessee (tenant) that outlines the general guideline for the lease such as maintenance responsibilities, rental fees, as well as penalties for late payments along with the term of the lease or the length of time the lessee may use the property.

Leases are Contracts

A lease is a legally enforceable contract; therefore, both parties are obligated to meet all the specified terms. Unavoidable circumstances do sometimes arise where the tenant fails to meet the terms of their Dallas office lease. For example, if a tenant is only able to complete five months out of the ten months originally stated in the contract, it is important that the lessee knows what will happen if such a scenario occurs.

Breach of Contract

When a tenant breaches the contract, normally what the landlord can do to protect their interests is to sue the tenant for non-payment and demand compensation for the damages, which would be the sum of the rental fee for the remaining months. To reduce the tenant’s liability, the landlord may lease the property to another tenant. Until a new tenant signs a contract with the landlord, the existing tenant will have to pay their obligation for the number of months the property has remained vacant.

Having to pay for an office space that is no longer being used can be a huge waste of resources. Therefore, lessees must protect themselves from a breach of contract due to the failure of completing the terms stated in the Dallas office lease. There are several pre-emptive measures that can be negotiated with the landlord to avoid getting penalized or to somehow reduce the liability in case a breach of contract occurs during the time of a lease. They are as follows:

  • Liability Cap – A liability cap is a specified amount agreed by both parties which will serve as a penalty for the breaking party. In case the tenant fails to fulfill the terms stated in the commercial lease, they will only be liable to pay the amount previously stated in the lease terms.
  • Break Clause – A break clause is a specified date agreed by the landlord and tenant wherein either party can terminate the lease without incurring any liability. Usually, a break clause is only valid for a certain period of time. Once the break clause expires, the tenant is liable if they breach any term of the contract.
  • Assignment Clause – A tenant may also negotiate for an assignment clause in order to avoid liability. An assignment clause authorizes the tenant to re-assign the contract to another tenant. Once another tenant assumes the lease, the original tenant can freely vacate the property without any liability since the landlord has not incurred any loss from the reassignment.

These conditions are not always stated on the lease so a lessee may have to negotiate with the landlord in order to make sure these terms are stated in the commercial lease. It is advisable that a real estate broker assists during the negotiations and closely examines the conditions of the Dallas office lease. The real estate broker could also raise a red flag in case there are questionable provisions stated in the lease. These are small, simple measures but could save a lessee from the serious problem of breaching commercial lease terms. It is a way to be afforded protection from this unanticipated event!