Breaking my lease agreement early

[TallBox]

Hi

I'd like to get some advice from the board if I may.

I'm 15 months through a 24 month lease of a commercial suite. I have kept up my rental payments with no fuss or delay and have had a good relationship with the landlord so far.

My business is not taking off, and for this reason as well as others (personal), I have decided to pack it in and go back to my previous career. In three months' time, I'll be saying goodbye to my last customers and will have no revenue from then on and will be dissolving the (limited) company.

I notified my landlord that I'd like to terminate my lease agreement (between him and my limited company) in month 18 of my 24 month contract but he has responded saying that he expects me to fulfill the terms of the lease and pay for the entire period. No clause in the lease agreement exists for early termination.

I know I signed a contract (and both he and I did so in good faith - it's not like I've found a cheaper premises and am relocating my business because of that) and ethically I am leaving my landlord in the lurch. But I have no other option to pay for my costs as revenues just aren't coming in and I'll be closing the company in a few months. I've suggested that the little assets (some cash and sale of equipment totalling about £600) the company has remaining I could use for paying the business rates on the suite until the end of the rental period but he has not accepted this. Ultimately, I may have to liquidate the company as a last resort.

I can't have been the first person to be in this situation. So what are my options? How messy, legally, could this get?

Any advice would be appreciated

Thanks

 

[Charlie B ACS]

A few questions.

Is the lease in the name of a Limited Company?
If so, have you given Personal Guarantees?
Do you owe the Limited company Money (Directors Loan)?

This info will allow better advice to be given

 

[TallBox]

Thanks for your response Charlie B

The lease is in the name of the Ltd Company
No personal guarantees given
As director, I don't owe the Ltd company any money (I've been living off savings since, not even taking a salary)

Hope this helps

 

[Christine Hough]

Are you able to sublet ?

Were you eligible for small business rate relief?

 

[TallBox]

We are able to and are advertising for sub-lets but no joy as yet

And we are eligible for SBRR

Thanks

 

[Christine Hough]

Where are you, you never know there may be someone here looking for an office in your area.
Subletting does seem your best bet.

It would seem that if the business closes and the lease is in the business name then he would have difficulty getting the money from you, but I am sure a more equitable solution would be preferable for both of you.

Sorry to hear about your business not taking off. What was it?

 

[Christine Hough]

[quote="TallBox, post: 2396245, member: 148821"

And we are eligible for SBRR
[/quote]
Why then are you talking about £600 toward business rates?

 

[Tiger_Shark_Signs]

I was in EXACTLY the same position as you 2 years ago.
except we were 1 year into a 5 year lease.
Although we'd paid everyone up to that date and even left a massive deposit on the premises - we didn't have the £6k to appoint liquidators so on legal advice from the FSB we ceased trading and handed the keys back to the landlords.

They're advertising the unit as empty and showing people around but telling the council that we're still responsible. So the council took us to court for the following year's business rates (having sent us a refund for the previous year since we'd moved out!).
Long story short... we've had bailiffs on our doorstep - not fun with 3 small children in the house.
Thankfully - we're in the same position... it's a LIMITED company for a reason - no personal guarantees.

Just be careful when you make the decision... pay up now and walk away...
or be prepared for a battle and years of stress!

I'm no expert on this at all - but I've been through it... no... I'm going through it.