The unilateral and early termination of a commercial lease raises recurring questions: whether the tenant can leave before the agreed term, whether the landlord can claim all rent to the end, and how to calculate loss of profit. Below we explain, in practical terms, what happens in these scenarios, what the law allows, and how to prevent disputes with a well-drafted contract.

Early termination in a commercial lease

In leases for use other than housing (shops, offices, warehouses), the primary rule is the parties’ agreement. If the contract does not provide for early termination, the tenant’s early exit constitutes a breach, allowing the landlord to seek termination and damages. However, courts do not award “all remaining rent” by default: compensation is linked to actual, proven loss, with special attention to a reasonable vacancy period and to the landlord’s duty to mitigate loss.

Applicable legal framework

Under the Urban Leases Act (LAU), commercial leases have no statutory right of early termination like article 11 LAU for dwellings. Therefore, unless agreed, an early exit is a breach that enables termination (art. 27 LAU) and damages (art. 1124 Civil Code). The amount is not automatic: it depends on the loss of profit actually caused and on the landlord’s proven diligence in re-letting the premises.

Specific performance vs. termination

Although in theory the landlord could seek specific performance, once the tenant has returned the keys and vacated, the effective route is termination with damages. In practice, courts assess loss by the reasonable vacancy period until a new lease is signed and by related costs, not by a flat sum of all remaining rent.

Compensation for loss of profit

Loss of profit reflects the rent not received while the premises remained vacant due to the early termination. It is not an unlimited presumption but an amount to be proven. If the landlord shows that it took X months to re-let despite active marketing, compensation will usually be limited to that interval (plus, where applicable, evidenced costs and any shortfall if the new rent is lower).

Duty to mitigate loss

The landlord must mitigate loss: advertise on portals, work with agencies, price at market level, allow viewings, and carry out essential make-ready works. Inaction or overpricing may lead to a reduction in the indemnity by breaking the causal link.

Three common contractual scenarios

1) Early-termination penalty clause

If the contract includes a penalty clause (e.g., X months’ rent for early exit), courts generally apply the agreed amount. A judge may moderate it if manifestly disproportionate, but it provides certainty and reduces litigation.

2) Contractual right to terminate with compensation

Some contracts allow the tenant to terminate early by paying a set compensation (sometimes inspired by the dwelling model). In that case, compensation is pre-agreed and judicial review focuses on coherence and proportionality.

3) Silence (no clause)

If nothing was agreed, early exit is a breach and compensation is judicially assessed. “All remaining rent” is not the automatic yardstick: actual loss must be proven (vacancy, costs, rent difference) with objective evidence.

Practical quantification criteria

• Reasonable vacancy: months reasonably needed to re-let in that market.
• Landlord’s diligence: agency mandates, listings, viewings, offers.
• Market and property features: location, condition, demand, seasonality.
• Remaining term: relevant but not determinative on its own.
• Rent gap: if the new rent is lower, the shortfall may be claimed for a reasonable period.
• Associated costs: advertising, brokerage, essential works to bring to market—if documented.

Useful evidence for the calculation

Particularly useful: key-handover deed (date and condition), dated listings, agency instructions, rent comparables, market expert report, offers received, and—if re-let—the date and rent of the replacement lease.

Common mistakes that make disputes costlier

By landlords

• Claiming “everything” by default without proving loss or reasonable vacancy.
• Failing to mitigate: months without real marketing or with above-market pricing.
• Overreaching clauses later moderated or found ineffective.
• Poor record-keeping of steps taken and communications.

By tenants

• Assuming a statutory right to terminate like in dwellings (there is none for commercial leases).
• Leaving without negotiating a structured exit with a clear cost.
• Vacating without a handover deed and without documenting the condition.
• Failing to evidence business infeasibility or force-majeure-type causes that could modulate liability.

How to bulletproof the contract and avoid disputes

Clear and proportionate termination clause

Agree on a balanced penalty (e.g., 2–6 months’ rent) or a mixed formula with cap and floor, conditional on the tenant facilitating viewings, handing over keys with a deed, and leaving the premises ready for marketing.

Market-aligned rent

A market rent and realistic reviews enable faster re-letting if there is a rupture, which reduces the indemnifiable period—and the potential dispute.

Handover and communication protocol

Include a handover protocol (inventory, cleaning, minor repairs, keys) and a clear notification channel to avoid evidentiary disputes and shorten proceedings.

Quick action guide

If you are the landlord

1. Collect keys with a deed and photographs of the condition.
2. Market immediately (agencies, portals, signage) and keep evidence.
3. Adjust rent to market with comparables or an expert report.
4. Calculate compensation based on actual vacancy and justified costs.
5. Explore a settlement before suing: it often saves time and costs.

If you are the tenant

1. Negotiate a structured exit with a clear, agreed cost and timeline.
2. Hand over keys with a deed to stop accrual and leave the premises fit for marketing.
3. Cooperate with viewings and provide information to help re-let sooner.
4. Document the reasons for termination (sales, licences, works, force majeure) if you seek to modulate liability.

FAQs

Can the landlord claim all remaining rent to the end?

Only exceptionally. The usual approach is to compensate the actual loss (reasonable vacancy, costs, rent difference), not all remaining months as a lump sum.

Does the dwelling rule (art. 11 LAU) apply to commercial leases?

No. There is no statutory early-termination right for commercial leases; without a clause, an early exit is a breach with compensation to be quantified.

How do I prove a reasonable vacancy period?

With documentary evidence of marketing (ads, mandates, viewings, offers) and, where appropriate, a market expert report supporting average re-letting times in the area.

Carlos Baño Abogados’ view

Our experience in commercial leasing confirms a simple rule: what’s agreed prevails and, if there is no clause, compensation for early termination is measured by proven loss and may be moderated to avoid excess. We recommend anticipating a potential rupture with a clear clause, documenting the handover, and evidencing all re-letting efforts. This reduces risks, time and cost.

If you need help to draft or defend your commercial lease, our team can review your case and propose the best route, negotiated or litigated. You can visit us at Carlos Baño León Law Firm or find us on Google Maps. You can also find more information on our English site: https://cbleon-abogados.com/en/.