Lease Buyout Agreement
(Tenant Pays Landlord to Terminate Office Space Lease Early)

Summary

This template is a lease buyout agreement between a landlord and tenant whereby the tenant desires to terminate its lease after an extensive build out of the space by the landlord for the tenant's new office headquarters. The tenant pays the landlord to terminate the office space lease early. This template includes practical guidance and drafting notes. In this agreement, the early termination was desired because of a sudden and unexpected buyout of the tenant by another company which did not desire to relocate to the location where the premises were located. Initially, because the tenant did not move into the built-out space, the tenant decided to keep the primary lease in place and to sublease its space to several subtenants needing smaller spaces than the tenant. After some subleases were successfully negotiated by tenant, the tenant decided it did not make economic sense for it to continue in the commercial leasing of the office space when that was not its primary business. Therefore, it negotiated an early termination of its primary lease by a payment to the landlord. As part of that agreement, the landlord agreed to negotiate new direct leases with the subtenants of tenant, on similar terms and conditions. In this template, the actual lease cancellation agreement is set forth on a separate document to be delivered by the landlord to the tenant in exchange for the payments from the tenant. It was kept on a separate document because it is to be recorded, and the parties do not want the amount of the payment and other terms to be disclosed. For a general discussion of office lease agreements, see Office Lease Agreements.