Jones & Walden, LLC - Bankruptcy

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You lease a commercial space for your new business. You hope the space gives you the exposure and foot traffic that you need, but it is hard to be sure.

You project that your new company will make $500,000 per year. It has to in order for that lease to be affordable. Can you get out of the lease if your projections fall short of that mark?

Possibly, but it depends on how the lease was written. It is important to consider this up front. You may be able to add an exit clause to the lease. This can get you out of it without any obligation to pay.

For example, perhaps the initial lease is for three years. You may want the lease to specify that you can break it without penalty after a year if your projections don’t line up. If you make only $250,000 in that year and you know you need a new location, you can leave before the next two years.

You may even want to put this clause in every year, on the anniversary of the lease, to give yourself a chance to reassess where you stand. If you like how things are going and the direction your business is heading, you can keep the space. If you think a new location would give you better results, you have an easy out without being trapped for years.

This is just one way to get out of a commercial lease. There are many others. The key is to make sure you consider your legal options and your rights up front.