Take care with conditions requiring that the rent reserved by the lease is paid quarterly in advance. The effect of this is that if it is paid pro rata up to the break date then that will not amount to compliance (since the full quarter’s rent has not been paid). Because of this point, the lease should expressly provide for a pro rata refund once the break has been effected, since otherwise any overpayment by T will be irrecoverable.

T should also take care as to what is defined as ‘rent’. This will often include items such as insurance premiums, service charges, and even penalty interest. If such items come within the definition of ‘rent’ then they must be cleared in full to comply with any precondition of exercising the break clause.

The break clause may require ‘material compliance’, but do not be misled into thinking that this implies equitable tests of fairness. It may dilute an absolute requirement, but it is still a strict standard. Moreover, what does ‘material’ mean – does a series of minor breaches amount to a material breach? If there has been a material breach in the past that has since been rectified, then has T ‘materially’ complied? Likewise, take care if ‘vacant possession’ is required since that is more stringent than it looks (eg all rubbish must be removed, and all sub-Ts must have vacated).

If you are advising a T who is about to exercise a break clause then do go out of your way to emphasise the pitfalls of strict compliance with preconditions. For further guidance see [2007] 200 Property Law Journal 16. © Practical Lawyer