A tenant preparing to leave may assume that paying the landlord’s final invoice is enough to satisfy a lease break clause. A landlord may assume that an unpaid sum automatically defeats the break. The recent case of Sterling House Ltd v International Baccalaureate Organisation (UK) Ltd [2026] EWHC 2680 (BP) shows why neither assumption is safe without examining the lease, the correspondence and the timing of payment demands.
The case concerned the effect of a break notice served by the tenant to terminate the lease on 23 February 2026. The lease required annual rent to be paid quarterly in advance and insurance rent on demand; if either was outstanding at the break date, the break notice would have no effect. The landlord said approximately £45,000 in annual rent and £2,300 in insurance rent remained unpaid. The High Court dismissed its claim.
What happened?
In February, the tenant asked the landlord’s agents for outstanding rent and service-charge invoices ahead of handover. After a chaser, the agents issued a rent invoice covering only the period to 23 February 2026, rather than the full quarter. The tenant paid the amount invoiced 10 days before the break date, believing it had made all the payments needed for the break to be effective.
However, the landlord hand-delivered an insurance-rent demand to the tenant’s registered office at 3pm on Friday 20 February 2026, with the break due on the following Monday. The tenant paid the demand after the break date.
What did the court decide?
The judge found that the rent invoice clearly represented what the landlord wanted paid before handover. The tenant had reasonably relied on it. The landlord was therefore estopped from relying on the additional annual rent to defeat the break, despite the lease’s payment condition.
The judge also found that the Friday insurance-rent demand did not allow a reasonable time for the tenant to pay it before the break date and it had not delay doing so.
What can landlords and tenants learn?
For landlords:
- Review break conditions and payment records early.
- Check invoices against the lease before sending them, particularly where the invoice covers only part of a rent quarter.
- If insurance rent requires a demand, send it through the agreed channels with enough time for receipt and payment; a last-minute demand for a variable sum may leave too little time for the tenant to pay.
For tenants:
- The case should not be treated as a substitute for a thorough break audit.
- Work from the lease, not just an invoice.
- Identify every sum due and potentially due and that must be paid for a break to take effect, check when each falls due and allow for internal approvals, international teams and bank processing.
- Ask for figures well ahead of the deadline, keep the correspondence and confirm that payments have arrived. This tenant succeeded on the specific evidence; an invoice will not necessarily excuse a short or missed payment in another case.
Speak to our team
A break can depend on the precise wording of the lease and what happens in the weeks before the deadline. If you are planning a lease exit or responding to a break notice, contact our specialist Property Litigation Team for advice on anything related to break clauses and any other landlord tenant issue.
You can contact our team by submitting an online form or calling 0345 209 1000.
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