For many businesses, choosing commercial premises goes hand-in-hand with business growth. You’ve thought strategically about the location, required facilities, space for expansion and how much you are prepared to pay per sq. metre.
It’s an exciting time, but also a potentially risky one. Commercial property law is complex, and the financial stakes can be high. An inflexible lease with hidden surprises can leave your business exposed.
Legal advice when leasing a commercial property
Whilst using a solicitor isn’t a legal requirement, we’d certainly recommended it – especially given the length of the commitment and high financial value.
You need to be sure all the necessary checks and surveys have been carried out and the that the titles to the property have been investigated. You must also understand your obligations under at least three key documents; the Heads of Terms, the Contract and the Lease.
Checking commercial leases
Many of the obligations on the Tenant are fair, but some can be Landlord biased, leaving Tenants exposed.
Let’s look at some of the more prominent covenants within a lease where this could happen:
We’ve seen plenty of leases where the Tenant is expected to make sure the property is in a better state of repair at the end of lease than it was at the commencement of the lease, at the Tenant’s expense. This can be extremely costly. As your solicitor, we would seek to limit this obligation and negotiate a reference to a schedule of condition.
As your business changes, you might want to make non-structural alterations such the installation or removal of partitioned walls. It can be difficult to obtain retrospective consent. If it is something you are likely to want to do, we can negotiate the ability for you to be able to do this within the terms of your lease.
If you are taking a lease of part of the premises, the Landlord will seek to recover the cost of repair and maintenance to the building by way of a service charge. We can make sure the lease details the service charge payable by you, and that it is fair.
You will want to make sure that the rent review provisions are suitable for you as a Tenant so that you can keep control of your rental costs. We will negotiate these provisions to make sure you have the right to negotiate the revised rent, or if the revised rent cannot be agreed, the rent is decided by a third party.
You would be surprised how many leases are drawn up without a suitable break clause. Having a break clause inserted into the agreement gives you, the Tenant, more flexibility to determine the lease. This can be at any time with a few months’ notice or on a fixed date during the term of the lease. We’ll help you decide what works best for you and negotiate accordingly.
There are, of course, many other factors and covenants to consider.
We can help you understand these and resolve any unfavourable aspects of the agreement before the lease commences, saving you unnecessary complications – and money – in the long-run.