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How can I exit a commercial lease?

Indianapolis, IN |

I have a 3 year commercial lease. It is up in approximately 18 months. My business is showing a loss and I can not maintain the current rent. I'm set up as a Sole Proprietor and am the only signing party on the lease. There is not a section in my lease saying what would happen if I could no longer pay or needed to exit the business. I'd like to rent a smaller and significantly less expensive space in the area which I believe would get me to the break even / profitable range. What are my options? Can the landlord come after my personal accounts? What about my home or car? I'd like to cause the least amount of strife for the landlord but can't afford the rent very much longer.

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Attorney answers 3


You can try and negotiate an early termination of the lease but if the landlord is not willing to do that you may wind up liable for any damages associated with your breach.

You may also want to consider looking for someone to sublease the space if that is not prohibited in your current lease, as that could reduce or eliminate the financial impact of you leaving the space.

Bottom line is that as a sole proprietorship you very well may find your personal assets at stake when it comes to obligations associated with your business. Consider meeting with a lawyer to discuss incorporating as an LLC or Corporation to reduce your personal exposure on issues like this in the future.

Legal disclaimer: The answer provided above is for general information purposes only and should not be relied on as specific legal advice. This answer does not form an attorney-client relationship. You should consult with an attorney of your choice to fully advise you about your legal rights and obligations.


Try to negotiate out. But, the lessor is not obligated to let you out of your agreement


I agree with my colleagues. Negotiating an early termination would be the best option to facilitate termination of the lease without accruing personal liability and endangering personal assets.

You should seek the advice of an experienced attorney to help you identify your legal rights and remedies and to help you develop a strategy to deal with your particular set of circumstances.

NO LEGAL ADVICE: This response is not intended as legal advice nor should you consider it as such. It is intended only as general information with respect to a question that you have raised. You should not act upon this information without retaining professional legal counsel. Please keep in mind that merely contacting Bogin, Munns & Munns, P.A. cannot represent you until the firm knows there would not be a conflict of interest, and the firm determines that it is otherwise able to accept the engagement. Any information or documents sent prior to your executing an engagement letter and submission of a retainer deposit cannot be treated as protected by an attorney client-privilege and may be determined by a court to not constitute protected information of any nature.