Posted: Thursday, 24 July 2008 @ 16:42
Does the idea of a long term legally binding commitment frighten you?
You might be starting up in business or just need the flexibility to leave premises at short notice. You might be a property owner who doesn't want a tenant to acquire rights of occupation. For both parties, the cost of employing lawyers to negotiate a fifty page document can also be prohibitive. Here are a few alternatives:
Tenancy at Will
This is the 'one night stand' of property relationships. A tenancy at will gives a tenant no rights of occupation and can be terminated by either party without notice at any time. This sort of relationship is typically used to get a tenant into premises quickly whilst a more formal relationship is negotiated. The danger of this type of relationship is that it is too uncertain for most tenants and for a landlord there is the risk that if it is not documented correctly and the tenant stays in the premises for long enough, the law will imply a more formal tenancy with rights of occupation.
Licence to Occupy
This is a relationship that is often misunderstood. The term 'licence' is probably the most mis-used term in property law. A licence should be used where a landlord wishes to prevent a tenant acquiring rights of occupation but the tenant requires something more certain than the tenancy at will. The tenant usually has the right to use a defined amount of space within a larger building but the landlord retains the right to move the tenant to a different part of the building. Careful drafting is required to ensure that the document isn't seen as a lease in the eyes of the law - merely calling the document a licence does not alter its legal status if it satisfies the legal definition of a lease.
Short Form Excluded Lease
This is a bit like a living together without getting married. Whilst the relationship exists it has all the characteristics of a protected business lease but when the term of the lease ends the tenant has no right to remain in the premises. There is a statutory procedure that needs to be followed to exclude a tenant's right to renew the lease. This is only ever of benefit to a landlord as it allows the landlord the flexibility to decide whether or not to continue the relationship without any benefit to the tenant. The British Property Federation has produced a standard short form excluded lease which can be completed by the parties online and printed off.
For more advice on short term leases, contact commercial property lawyer, Steve Petty, on 01926 629005.
Steve Petty, Commercial Property Lawyer
This blog 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
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