If you sign a commercial lease, it may include an exit clause. If not, you may want to consider asking for one if you are concerned about the length of the agreement. An exit clause gives you a chance to get out of that lease early.
This is also sometimes called a “break clause” because it allows you to break the lease agreement. Say that you signed a lease saying that you would use a certain commercial space for the next two years, but you have a break clause saying that you can get out under certain conditions. If these conditions are met, you do not necessarily have to wait for two years. The clause allows you to end the arrangement without penalty.
What are the conditions?
It depends on how the clause is written and structured. For instance, people will sometimes base these break clauses on the success that the business is having in that specific location. If the business is not making money and so the owner can’t pay the rent, but the owner believes that a poor location is just holding the company back, they may be able to break that lease early so that they can move to a better location for their business.
In this sense, the exit clause may be helpful for both the property owner and the business owner who signed the lease. It gives the business a chance to try a different location, while the property owner gets a chance to find a tenant who may have more success in that specific location.
This is just one example of how an exit clause can be used. Make sure you understand all of your options when signing contracts or settling disputes.