Vacant vs. Abandonment

While a default clause in a lease can address simple topics such as failure to pay rent or maintain the space in a clean manner, more often, it addresses issues such as illegal use, declaring bankruptcy, vacating the premises and more.

Considering the varied purposes of a default clause, review by an attorney to best protect the tenant’s interest is a suggested practice.  However, one simple element is easy to grasp yet should be avoided at all costs: holding tenants in default if they vacate or fail to occupy the leased space. A common phrasing uses the term “abandonment of the premises.”

Leases should define abandonment as vacating the premises and failure to pay rent, or additional rent, in a timely manner.  We recommend emphasizing this meaning by inserting specific language allowing tenants to vacate the premises as long as they continue to meet all maintenance and payment obligations. In this case, vacating an office fails to meet the real meaning of abandonment, and default should be avoided.

On the other hand, the more restrictive definition can be justified in certain circumstances. For example, in a retail center, tenants adjacent to the anchor tenant expect revenue based on the occupancy of their larger neighbor. In such cases, the anchor company may likely be considered in default of the lease if it vacates.