Written by: Steven Jones on Thursday 23/06/2016
A commercial lease can be a complex document and it’s all too easy to overlook important details. We look at the kind of errors which crop up and why it’s so important to make sure a lease is correct before you sign.
Signing a lease without examining it thoroughly first, assisted by your lawyer, can lead to some serious consequences for you. The most common errors in commercial leases include:
Neglecting to determine who is responsible for maintenance and repair The lease should set out clearly who has responsibility for maintaining and repairing the property. Most landlords will require that the tenant keeps the property in good order and, at the end of the lease, returns it in good repair. It is essential that this is defined explicitly in the lease in order to avoid either a large repair bill or a lengthy and expensive court case.
Commercial leases imply that a tenant can remain on the property and ask for a renewal of their lease, once the old one comes to an end, as stated in the Landlord and Tenant Act 1954. The landlord has limited grounds to object to this but can, in theory refuse to grant a new lease. Tenants must, therefore, examine the lease carefully to see if security of tenure is included in the lease or not. If a landlord wishes to remove the tenant at the end of the lease, this must be explicit in the terms of the lease, and a formal process must be gone through.
If a landlord does not include a rent review clause into a lease they will be unable to raise the rent to cover an increase in inflation and other costs. While this may benefit the tenant rather than the landlord, legal issues may arise if the omission is discovered at a later date.
If a tenant fails to pay the rent or breaches other obligations within the lease, the landlord can evict them, without having to apply for a court order. However, without this clause being written into the lease, it could prove difficult and expensive to remove the tenant through the legal system.
Landlords can specify that their tenants must pay any legal fees incurred during variations to the lease, if they wish to avoid paying them themselves. Landlords may also ask that the tenant pays bailiff’s fees if an eviction is required (due, for example, to non-payment of rent). These instances are just some of the most common mistakes that tenants find in poorly-prepared commercial leases. There are numerous others too. It is for this reason that it is essential that you have a lease checked by a suitably-qualified commercial lawyer who can not only advise you of errors but also of omissions which may act in the landlord’s favour, rather than yours. Legal advice may be relatively expensive at lease stage, but the amount you’ll pay is a drop in the ocean compared to legal action later.
Eddisons can offer you advice on all aspects of commercial leases, with legal specialists who understand the intricacies involved in such complex documents. If you need guidance on what’s in your lease and maybe, more importantly, what’s been left out, talk to one of our team.