Break Notice
Landlord and Tenant
In the case of Avocet Industrial Estates v Merol [2012] a tenant’s break notice was invalidated by unpaid default interest.
The tenants lease specified that the break clause would be of no effect under two provisions. The first provision being that the tenant had not paid the landlord a sum equal to 6 months’ annual rent. The second provision was if there were any payments outstanding on or before the date of the break.
In this case the landlord argued that the tenants break notice was invalid as there was interest outstanding (the interest had accrued where payments had not been made on time by the tenant). The landlord had not demanded payment of the default interest and did not need to. The lease stated that interest would be accrued on late payments. The court was therefore unable to come to any other conclusion with the tenant falling foul of the second provision in the lease.
The default interest owed by the tenant was £130. With the break clause ruled as invalid the tenant had to pay the rent for the remainder of the term totalling approximately £337,500. The court itself acknowledged that this was a harsh result for the tenant.
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