Can A Tenant Renegotiate Their Lease

Performance Property Real Estate Question

Q: I am a small business owner and I rent space in an office building. Is it possible to renegotiate my lease? Cameron, Verona, NJ

A: Although a lease is a binding contract, it is possible to renegotiate depending on which term(s) in your lease you want to try to change. One of the changes landlords are most often willing to make to an existing lease is to add more time, particularly for a good tenant. In exchange for a longer lease term, your landlord may agree to a period of free rent, a rent reduction, or they may agree to reduce future rent escalations called for in the original lease terms. Many commercial office leases have provisions that let a tenant buyout the remainder of their lease term. A buyout occurs when an office tenant pays the landlord a negotiated amount to cancel the lease. If you agree to allow your landlord time to find another tenant to move into your rental space after you leave, they may be more willing to entertain a lease buyout. One way to functionally terminate your office lease without actually formally terminating it is to find another tenant to sublease your space (assuming that’s not prohibited in the original terms of the lease). A drawback of sub leasing your office space as a tenant is that you will likely remain responsible in the event your sub lessor doesn’t pay, and if the rent you negotiate with the sub lessor is less than what you owe, you’ll be responsible for the difference. Nevertheless, subleasing is normally less expensive to an office tenant than buying out the remainder of the lease. Thanks for your question, Cameron.

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