Commercial Leases: The Clauses That Cause the Most Disputes

Most commercial lease disputes don’t start with anything dramatic.

More often, they come down to clauses that seemed fairly standard when the lease was signed — the kind of wording no one thought twice about at the time. It’s only later, when circumstances change, that those same clauses start to cause problems.

That might be when a business wants to move, is under financial pressure, or simply needs more flexibility. By then, the detail in the lease really starts to matter.

For both landlords and tenants, small points in the drafting can end up having significant financial and practical consequences.

Break Clauses — Why Precision Matters

Break clauses are meant to offer flexibility. In reality, they’re one of the most common sources of disputes.

The issue is how strictly they’re interpreted. Courts tend to apply break clauses very literally, which means even small technical mistakes can invalidate a tenant’s attempt to break the lease.

Typical problems include:

• Missing the notice deadline — sometimes by just a few days or even hours
• Using the wrong wording in the notice
• Serving notice on the wrong party or at the wrong address
• Not meeting all the conditions attached to the break

Those conditions are often where things unravel. A break clause might require the tenant to:

• Pay all rent and other sums due
• Give up vacant possession
• Comply fully with the lease terms

Tenants sometimes assume minor issues won’t matter — for example, a small disputed amount of rent. In practice, even relatively minor breaches can be enough to prevent the break from taking effect.

The result can be a tenant stuck in a lease they expected to leave, with ongoing liability.

Repairing Obligations and Dilapidations

Repairing obligations are another frequent source of conflict, particularly in full repairing and insuring (FRI) leases.

The problem is often one of expectations. Tenants don’t always realise how far their obligations extend until the end of the lease, when a dilapidations claim lands.

These claims can be substantial — sometimes running into tens or even hundreds of thousands of pounds.

Common areas of dispute include:

• The condition of the property at the start of the lease, especially where there’s no proper schedule of condition
• What counts as fair wear and tear
• Whether “repair” includes full replacement rather than just fixing what’s there

Landlords may expect the property to be returned in a much better condition than the tenant considers reasonable. Tenants, on the other hand, may feel they’re being asked to go beyond what the lease actually requires.

These disagreements often need expert input and can quickly become expensive to resolve.

Rent Review Clauses

Rent review clauses are supposed to keep rent in line with the market. But if they’re not clearly drafted, they can do the opposite.

Older leases, in particular, can contain review provisions that don’t sit comfortably with current market conditions.

That can lead to disputes about:

• How the rent should be assessed
• What assumptions should be made
• Which comparable properties should be used
• When the review should actually take place

Once things become unclear, parties often end up relying on valuers or formal dispute resolution processes — both of which add time and cost.

Alienation and Assignment Restrictions

Restrictions on assigning or subletting a lease can become a real issue when a business needs to adapt.

From a landlord’s perspective, these clauses protect the value of the property. From a tenant’s perspective, they can feel restrictive — particularly when trying to sell a business, restructure, or reduce overheads.

Common flashpoints include:

• Assigning the lease as part of a business sale
• Group reorganisations
• Subletting part of the premises

Disputes tend to centre on whether a landlord has unreasonably withheld consent. The answer often comes down to the exact wording of the lease, which means even small drafting points can make a big difference.

These situations often arise at times of financial or commercial pressure, which can make resolution more difficult.

The Danger of Informal Agreements

In longer-term landlord and tenant relationships, it’s not unusual for informal arrangements to develop.

That might include side letters, verbal agreements, or things agreed over email. Sometimes it’s simply a shared understanding of how things are done.

The difficulty is that these arrangements don’t always have legal effect — especially if they conflict with the terms of the lease.

When the relationship is good, that may not matter. But if things change, one party may fall back on the strict wording of the lease, leaving the other exposed.

Disputes often arise where one side relies on what was said informally, and the other relies on what’s written down.

Why These Disputes Escalate

Commercial lease disputes can be particularly hard to resolve for a few reasons.

The sums involved are often significant. Business operations may be affected. And once positions are taken, they can become entrenched quite quickly.

There’s also a degree of uncertainty in how some clauses are interpreted, which makes outcomes harder to predict.

As a result, what starts as a relatively technical disagreement can escalate into a costly and time-consuming dispute.

Avoiding Problems in the First Place

Many of these issues can be avoided with the right approach at the outset.

That usually means:

• Taking time to properly review the lease before signing
• Understanding how key clauses will operate in practice
• Making sure any flexibility (like break clauses) is workable
• Getting advice early if issues start to arise

A well-drafted lease doesn’t just reflect the deal at the time — it anticipates what might happen later.

Commercial property solicitors, such as Burt Brill & Cardens, regularly advise landlords and tenants on identifying risks early, resolving disputes pragmatically, and avoiding unnecessary litigation where possible.

Conclusion

Commercial leases are long-term commitments, and the detail matters more than people often expect at the outset.

Most disputes don’t come from deliberate breaches, but from clauses that weren’t fully understood or tested until later.

Taking the time to get things right at the beginning — and getting advice when needed — can make the difference between a manageable issue and a much more serious dispute.

For both landlords and tenants, clarity early on is almost always the best form of protection.