Commercial Property
I am intending to lease business premises. Do I need a solicitor to negotiate the terms for me?
Landlords and their Agents deal with business leases on a daily basis and you may not have the same level of experience.
Landlords often fall back on “Heads of Terms” agreed before a solicitor has advised a prospective tenant as a reason for not accepting a revision to the draft lease. It is vital, therefore, that you instruct an experienced solicitor to assist you with negotiations before “Heads of Terms” are agreed with the Landlord or his Agent.
Why should I, as a prospective Tenant, employ a solicitor to advise me on the lease?
By entering into a lease you will be taking on obligations to the landlord, in particular, regarding repairs and for compliance with Regulations and Statutory provisions. Your solicitor is there to redress the balance between landlord and tenant and to make sure that you, as a tenant, are not taking on liabilities which are unfair or are particularly onerous.
Is the landlord or the tenant responsible for repairing damage to the premises which occurs during the term of the lease?
This would depend on the terms of the lease. However, whilst a tenant may not be directly liable for damage or repairs to the structure, he may, indirectly, be liable if the landlord can recover such costs by way of a service charge.
What is involved in “contracting-out” of “security of tenure” under the Landlord and Tenant Act 1954?
The 1954 Act gives a tenant in most circumstances an automatic right to renewal of a tenancy at the end of the term. A landlord and tenant can agree that the security of tenure provisionsare “contracted out” of the 1954 Act. To do this a very specific procedure under the Act must be complied with, otherwise it will be invalid.
Can my pension fund lease business property to my business?
If you are intending to buy business premises, you should consider whether it is beneficial:
· to buy them in your own name and lease them to your business,
· to buy them in the name of your business, or
· to buy them in a pension fund and the trustees lease them to your business.
Normally the most financially and tax efficient way is to buy business premises in the name of a pension fund provided, of course, your pension fund has sufficient funds available to make such an acquisition possible.
Does the Tenant have a right to leave before the end of the term?
Unless the Lease contains a specific provision allowing a tenant to terminate the lease term prematurely (a “break clause”), the tenant cannot otherwise terminate the lease. If a tenant holds over after the end of the term, the continuation tenancy can only be brought to an end by the tenant serving 3 months’ written notice. This gives the landlord an opportunity of finding a new tenant. Holding over by just one day can cause a tenant a real problem.
What are ‘restrictions on alienation’? How far do they usually extend?
A commercial lease invariably restricts the tenant from assigning the lease or sub-letting and there will be complex provisions in the lease which need to be considered very carefully. Once a tenant enters into a lease, the tenant’s liability, even if he has assigned the lease, will still continue until, at least, the end of the term. When a tenant enters into a lease he must be prepared to be responsible for the obligations under the lease for the whole term of the lease.
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