Commercial Lease Default? Why Terminating the Lease May Hurt More Than It Helps

When a tenant defaults on a commercial lease, missing rent payments, abandoning the property, or breaching key terms, landlords often feel pressure to act fast. One option that may seem obvious is to terminate the lease and move on. But here’s the catch: terminating a lease after a default can sometimes backfire.

In Florida, commercial landlords need to approach defaults carefully. Termination can limit your ability to collect damages, open the door to tenant counterclaims, or even violate lease provisions if not done correctly. Before you serve that termination notice, it’s important to understand the risks and legal consequences.

What Happens When a Commercial Tenant Defaults on a Lease?

Before jumping to termination, it’s critical to first understand what kind of default has occurred. Common lease defaults include:

• Failure to pay rent
• Unauthorized alterations to the space
• Abandoning the property
• Operating in violation of zoning or permit requirements
• Failing to maintain required insurance

A well-drafted commercial lease typically includes default and cure provisions, clauses that spell out what happens when a tenant violates the lease, how much notice they’re entitled to, and whether they have time to fix the issue.

Can a Landlord Terminate a Commercial Lease After Default in Florida?

Yes, but Florida law does not require landlords to terminate the lease. In fact, termination is optional, and in many cases, it may not be the best choice.

Landlords generally have three options when a tenant defaults:

1. Terminate the lease and retake possession
2. Retake possession without termination (also known as re-entry)
3. Do nothing and sue for rent as it becomes due

Which path you choose affects what remedies are available and what risks you’re taking on.

Why Terminating a Commercial Lease Can Limit Your Legal Options

1. Termination Can Waive Your Right to Future Rent

Under Florida law, if you terminate the lease completely, you may give up your right to collect rent owed for the remainder of the lease term. Once the lease is legally over, the tenant may argue that you’re no longer entitled to anything beyond unpaid rent up to the date of termination.

In contrast, if you simply retake possession without terminating the lease, you can often continue collecting “accelerated” rent or damages for the entire lease term, something to consider if the tenant still has years left on their lease.

2. Termination May Trigger Counterclaims by the Tenant

If you don’t follow the lease’s default procedures carefully, especially when it comes to notice and opportunity to cure, you risk triggering claims that you breached the lease, not the tenant.

Common tenant counterclaims include:

• Wrongful eviction
• Breach of contract
• Interference with business operations

Even if you were justified in terminating, sloppy execution or lack of required notice can create legal exposure.

3. You Might Violate the Lease by Terminating Too Early

Most commercial leases contain clauses that require the landlord to:

• Give written notice of default
• Allow a grace period to cure the default
• Follow specific procedures before termination
  

Skipping any of these steps, especially if they are clearly laid out in the lease, can lead to legal challenges and weaken your position in court. Judges in Florida typically enforce lease terms strictly, and courts may rule against landlords who don’t adhere to those notice and cure periods.

What Should Landlords Do Before Terminating a Lease?

If you’re dealing with a defaulting commercial tenant, here are steps you should take before sending a termination letter:

1. Review the Lease Carefully

Every lease is different. Understand the notice periods, grace periods, and what constitutes a curable default. Also, confirm whether you have the right to accelerate rent or charge liquidated damages.

2. Document the Default

Maintain clear records of missed payments, photographs of the condition of the property, and any communication with the tenant. This helps if the matter proceeds to litigation.

3. Consult with Legal Counsel

An experienced commercial litigation attorney can help you determine the best course of action, whether it’s termination, re-entry, or a negotiated exit, and ensure that any steps you take comply with the lease and Florida law.

Alternatives to Terminating a Lease After Tenant Default

Not every commercial lease default needs to end in termination. Depending on the situation, other approaches may preserve more legal leverage:

• Workout Agreements: You and the tenant can renegotiate terms, defer rent, or agree on a repayment plan.
• Non-termination Re-entry: Take back possession but leave the lease in place, then sue for unpaid rent later.
• Assignment or Subletting: If the lease allows, you may be able to assign or sublet the space to recover lost revenue.
• Stipulated Judgment or Settlement: Reach an agreement that includes repayment, release of claims, or structured exit without a full-blown court case.
  

Final Thoughts: Terminate Smart—or Not at All

When a commercial tenant defaults, it’s tempting to move quickly and cut ties. But in many cases, terminating the commercial lease immediately does more harm than good. It can reduce your legal options, trigger claims against you, and even violate the lease terms you’re trying to enforce. At Ayala Law, our attorneys help landlords in Florida make strategic decisions when tenants default on their commercial lease. 

Whether you’re facing a payment issue, property damage, or early abandonment in a commercial lease, contact an experienced business, arbitration, and product defect attorney in Miami at 305-570-2208.

You can also contact arbitration attorney Eduardo A. Maura at eduardo@ayalalawpa.com.

Schedule a case evaluation online here.