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Home Q&A Forum Can I cancel my lease early without penalties due to unforeseen circumstances?
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Commercial

Cancellation Of Lease

California

Asked on Oct 25, 2024

Can I cancel my lease early without penalties due to unforeseen circumstances?

I am currently leasing a commercial space for my small business, but due to the ongoing COVID-19 pandemic and resulting economic downturn, my business has suffered significant financial losses and is on the brink of closure. I am struggling to keep up with the rent payments and have explored various options to reduce expenses, including downsizing or relocating to a more affordable space. However, the lease agreement I signed includes a clause that imposes substantial penalties for early termination. I am seeking legal advice on whether there are any grounds or legal provisions that would allow me to cancel the lease early without incurring these penalties, considering the unforeseen circumstances and financial hardship I am facing.

1 Attorney answer

Answer

Commercial

California

Answered 32 days ago

Dolan W.

ContractsCounsel verified

Business Lawyer
Licensed in California
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5.0 (54)
Member Since:
September 8, 2024

Hello! I'm so sorry that this has happened to you. So the downside here is that you're still bound to the lease, even despite these headaches. You're bound from the moment that you agree to rent the premises. This means that unless the landlord lets you out of it, you can't get out of it. There is a silver lining: 1. You could see if you can find a subtenant to rent it from you; 2. You can try to find someone to take over the lease agreement for you with the landlord's consent; 3. You could offer a settlement to the landlord, such as 1.5x the regular rent. 4. If you can't do either of those, then there is still some hope. Under the law, when a tenant breaks their lease there is an initial obligation or debt that the tenant owes to the landlord for any unpaid rent for the remainder of the lease. However, before the owner may claim such damages, s/he must mitigate (lessen) damages by making a good faith effort to re-rent the unit as soon as possible to try to cover any potential loss resulting from the lease-breaking. In other words, before a landlord can recover in court for the remainder of the lease (even for commercial leases), the landlord must make all reasonable efforts to find a new tenant to replace the old one. Best of luck! Dolan

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