IQ-Magazine-Issue-14

TAKING ON OR RENEWING A COMMERCIAL LEASE?
WHAT EVERY TENANT SHOULD KNOW
Tim Mendes Da Costa of Greene & Greene Solicitors looks at the
risks of a long-term commercial lease
IQ legal
Leases are generally long-term legal contracts and it is vital to understand the risks
prior to making a commitment that could turn out to be more costly than you first thought
1
Break Clauses. You
should be looking
to negotiate a Break
Clause, so that you have the
option to break the lease
after the first two to five
years of the term in case
the premises themselves,
or the business, are not
working out. In addition,
the conditions imposed in
the lease to comply with the
Break Clause should not be
too onerous.
2Rent Reviews. Try to
tie in the Rent Review
date(s) in your lease
with the Break Clause(s)
referred to above. This gives
you an opportunity to get out
of the lease at the point where
the rent could suddenly be
getting more expensive. Try
to agree a cap to any Rent
Review provisions in the lease.
3
Security of Tenure.
Wording should be
included to ensure
security of tenure: i.e. to
ensure the right to stay on in
the premises after the expiry
of the current lease.
4
Lease Plans. Make sure
all the areas that the
landlord has agreed
to lease to you are marked up
accordingly on the lease plan.
Frequently, less obvious areas
are missed off (e.g. parking
areas, external amenity areas,
rights of access).
5
Rent Free Periods.
These are often
negotiated by tenants
who will need to ‘fit out’ the
premises for their required use
before they can commence
trading.
6
Schedules of Condition.
Beware of a ‘full
repairing and insuring’
lease, which will say that the
tenant must keep the premises
in ‘good repair and condition’,
as you could find yourself
responsible for paying for an
expensive new roof! This can
be avoided, but a Schedule of
Condition may be required and
the legal wording here is key.
7
Latent & Inherent
Defects. This is
particularly relevant if
you are considering taking on
newly constructed premises. The
lease should make it clear that
any such defects that arise (e.g.
the foundations are inadequate)
are the responsibility of the
landlord, not the tenant, or
the cost of rectification could
fall to you.
More Information
Greene & Greene Solicitors, Bury St Edmunds
timmendesdacosta@greene-greene.com www.greene-greene.com
01284 717437
issue 14 | page 21