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Landlords need to be alive to break clauses

The Supreme Court may have delivered an early Christmas present for landlords with the much anticipated judgment in the case of Marks and Spencer plc v BNP Paribas Securities Services Trust Company (Jersey) Ltd and another, but it looks like a lot of them have failed to appreciate what has fallen in their laps.

The case hinged on refunding rent which had been paid but related to a period after a break option had enabled the tenant to leave the property. In the M&S case, by finding in favour of the landlord the Supreme Court has held that rents paid in advance are not treated as accruing from day-to-day

Without revisiting the particulars of the case, it is clear that landlords should conduct a thorough audit of all break clauses in the leases they have granted and take advice on what their strategy should be if the tenant seeks to activate the clause.

Crucially, landlords need to look at where there is a requirement to apportion rent following the exercise of a break clause – or what the absence of one means in terms of their strategy for dealing with a break.

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