Your lease exceeds five years in length but contains no early termination option. Long-term leases without an exit clause lock tenants into financial obligations that may become unsustainable if business conditions change, the location underperforms, or the tenant needs to downsize or relocate.
By Angel Campa, Founder · Updated March 2026
Flagged when the lease has no termination option and the lease term exceeds 60 months.
A 10-year NNN lease at $25 per RSF on 5,000 RSF represents a total obligation of $1,250,000 in base rent alone, plus operating expenses. If the tenant needs to exit at year five, they face the remaining $625,000 obligation. Without a termination option, the tenant's only choices are subletting (often restricted and difficult), lease assignment (requires landlord consent), or defaulting and facing litigation. Business failure rates mean roughly 20% of commercial tenants will need to exit a lease before its natural expiration. Subletting typically requires offering below-market rates, costing the original tenant $5 to $10 per RSF annually in difference.
Negotiate a one-time early termination option exercisable after year three or five of the lease term. Standard termination penalties range from six to twelve months of rent plus unamortized tenant improvement costs and leasing commissions. Require at least six to nine months advance written notice before exercising the termination option. If the landlord refuses a termination option entirely, negotiate robust assignment and subletting rights as an alternative exit strategy.
Without an early termination clause, you are legally obligated for the full remaining rent through the lease expiration. Your options are limited to subletting (if permitted), lease assignment (with landlord consent), or negotiating a lease buyout directly with the landlord, which often costs 50% to 100% of remaining rent.
Standard termination penalties include six to twelve months of base rent plus the unamortized balance of any tenant improvement allowance and leasing commissions the landlord paid. Some leases also require payment of the landlord's costs to re-tenant the space.
For leases longer than five years, a termination option is strongly recommended, especially for growing businesses whose space needs may change. Even if the termination penalty is substantial, having the option provides critical flexibility that can save a business from financial distress.
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