Break options and surrenders: effect on subletting

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By Cara Beveridge

Where a property has been sublet, the parties to the headlease must be cautious about any determination of it.

Early determination of a lease might be achieved by break option — a pre-contracted right to bring a lease to an end, negotiated by the parties. Alternatively, and if they are both willing, a lease can be ended by surrender. This can be less predictable and often depends on goodwill and mutual interest at the time of determination.

Where the headlease contains a break option, the parties to it (and to the sublease) should consider what will happen to the sublease if the headlease is ended  — and what they should do about it…

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