How to Exit a Commercial Lease Due to Undisclosed Issues

Signing a commercial lease is a significant commitment for any business. However, what happens when you discover that critical information about the property was withheld before signing? Whether it's structural defects, zoning restrictions, environmental hazards, or prior legal disputes, undisclosed issues can severely impact your operations. Fortunately, Texas law provides remedies that may allow you to exit a commercial lease without facing severe financial penalties.

1. Understanding Your Legal Grounds for Termination

Several legal principles may allow a tenant to terminate a commercial lease due to nondisclosure, including:

• Breach of Contract – If the lease agreement contains explicit provisions regarding property conditions or disclosures that the landlord violated, you may have grounds for termination.
• Fraudulent Misrepresentation – If the landlord knowingly withheld material facts or provided false information that induced you to sign the lease, you may have legal recourse.
• Constructive Eviction – If undisclosed issues make the premises uninhabitable or unusable for your intended business purpose, you may argue that you have been effectively forced out.
• Texas Deceptive Trade Practices Act (DTPA) – Texas law protects consumers and businesses from deceptive business practices, which may apply in cases of misrepresentation or nondisclosure by a landlord.

2. Reviewing Your Lease Agreement

Before taking steps to exit your lease, carefully review the contract for:

• Disclosure Requirements – Some leases may include specific representations by the landlord about the condition of the property.
• Termination Clauses – Your lease may outline conditions under which you can lawfully exit the agreement, such as landlord breaches or failure to meet obligations.
• Notice and Cure Periods – Some agreements require tenants to notify the landlord of issues and allow them a chance to remedy the situation before termination.

3. Documenting the Undisclosed Issues

To strengthen your case, collect evidence that supports your claim:

• Inspection Reports – If structural, environmental, or zoning issues exist, obtain professional assessments.
• Communications with the Landlord – Save emails, letters, or text messages where you requested information or raised concerns.
• Legal or Regulatory Notices – If a city or state agency has flagged violations, these can serve as strong evidence.
• Impact on Business Operations – Demonstrate how the undisclosed issue is affecting your ability to conduct business, whether through financial loss, safety concerns, or regulatory noncompliance.

4. Negotiating a Lease Exit with the Landlord

Before pursuing legal action, consider negotiating with your landlord. Possible resolutions include:

• Mutual Lease Termination Agreement – Some landlords may agree to terminate the lease early, especially if another tenant can take over.
• Rent Abatement or Lease Modification – If complete termination isn't possible, you may negotiate rent reductions or lease changes to mitigate the issue.
• Subleasing the Property – If allowed under your lease, you might find another tenant willing to assume your lease obligations.

5. Legal Action: When to Involve an Attorney

If negotiations fail, legal action may be necessary. A real estate attorney can help you:

• File a claim for fraud or misrepresentation if the landlord intentionally withheld key facts.
• Seek damages under the Texas DTPA if deceptive practices are involved.
• Argue for constructive eviction if the property's condition prevents reasonable use.

Final Thoughts

Exiting a commercial lease due to undisclosed issues can be complex, but Texas law offers multiple avenues for relief. Whether through negotiation or legal action, understanding your rights is the first step to protecting your business.

Have questions about your commercial lease? Explore our resources or reach out to learn more about how The Keller Firm supports businesses in navigating lease disputes.

Disclaimer: This website is for informational purposes only and does not constitute legal advice. Do not act or refrain from acting based on the content of this site. Use of this site or communication with The Keller Firm through this site does not establish an attorney-client relationship.