A kick-out clause is a lease provision that allows early termination if specified conditions, such as sales thresholds, aren’t met.
A kick-out clause is a risk for the landlord because it creates a path out of a long lease. It may be tied to sales thresholds, a date, or the loss of a co-tenant. The notice period and any termination fee are important details. Buyers should treat a lease with a kick-out as having a shorter effective term and underwrite accordingly, since the stated term may not reflect the income that can be counted on.