Check your Lease - NOW
The vast majority of tenants never read their lease after it has been signed and frequently commit breaches of the terms of the lease through ignorance of the obligations imposed on them.
Commercial property lawyer Steve Petty points out just a few of the provisions you should be checking:
Rent payments dates
Amazingly, a significant minority of tenants have forgotten when they are supposed to pay the rent. Often what happens is that a payment will be made slightly late; the landlord overlooks this; the next payment is calculated by reference to the previous late payment and the official payment dates in the lease are forgotten. There are a couple of reasons why paying at the right time is important even if the landlord hasn't made a formal complaint about the late payments: Interest
- the lease will often provide that late payments of rent are subject to punitive rates of interest (typically 4%-5% above the base lending rate of a named bank). If you have allowed your rent payments to slip by a significant amount over time then you could be leaving yourself exposed to a significant interest claim by the landlord if it changes its stance on your late payment in the future. A classic example of this is where a tenant slips from paying rent quarterly in advance to quarterly in arrears. Renewal
- although tenants normally enjoy a statutory right to renew a business lease, there are various grounds which entitle a landlord to oppose the grant of a new lease. One of these is persistent breach of the terms of the lease. Persistent late payment of rent (especially if there have been other breaches of the lease) could be used by a landlord as a reason to refuse a new lease.
If you have negotiated a right to end the lease early and are considering exercising that right, it is vital that you check your lease to see how much notice you need to give to the landlord and when the lease will end. You only have to be one day late serving the notice for it to be invalid with the result that you are trapped in a lease you don't want possibly for years to come.
As I've mentioned in a previous blog, 'alienation' is a reference to a tenant's right to sell a lease on to a new tenant or sublet. If you are considering doing either then make sure you don't go through the process of finding a buyer for your lease or a subtenant before you understand the rules in the lease regarding assignment and subletting.
If you are considering carrying out some alterations at the premises - even if this is just the erection of some internal demountable partitioning then check your lease first to make sure you are complying with your obligations. Most alterations provisions require you to apply to the landlord in advance for consent and even if consent is not required you need to notify the landlord's insurers to avoid committing a breach of the insurance policy (and possibly invalidating the policy leaving you liable for any uninsured losses).
Check which repairs are your responsiblity and which are the landlord's. If the landlord is failing to carry out repairs then make sure that a written reminder is sent to the landlord pointing out the areas of disrepair and if this doesn't provoke an immediate response take advice from your lawyer. If you are failing to carry out repairs this can have a number of unpleasant consequences:
- The landlord may be able to do the work and charge you for it (almost always more expensive than doing it yourself)
- Breach of repairing obligations can also be used by a landlord as a reason for refusing to grant you a new lease
- Any breach (but breach of the repairing obligation is probably the most common) may invalidate a right to terminate a lease early
- If your lease contains an indemnity (see my early blog on this subject) then breach of the repairing obligation may cause the landlord to suffer all sorts of unexpected costs or losses for which you will be liable
If, having checked your lease, you still have concerns contact Steve Petty on 01926 620005 or email your specific question here.
Free Business Lease Review for Tenants here.
Article added: 18 August 2008 © Cousins Business Law
This article is not intended to constitute legal advice, nor is it intended to be a complete and authoritative statement of the law, and what we say might be out of date by the time you read it. You should always seek legal advice to confirm whether or how any information in this article applies to your particular situation. We offer a free telephone consultation to discuss your particular circumstances.
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