A commercial lease is the result of detailed negotiations between two willing parties and involves fundamental sensitive clauses which are often overlooked with tenants solely focusing on the rent!
The detail within clauses and covenants such as service charge, rent review, dilapidations, repair, break options and alienation can, if overlooked, result in a tenant paying disproportionate costs or facing years of frustration.
Service charge
Insist on capping the annual amount that can be recovered from you and try to do away with any sweeper clauses covering any other landlord costs.
Rent review
The hypothetical lease term within this clause determines how the rent is to be assessed at review and can differ from the actual lease terms. The user clause within a retail lease may limit the user to a clothing store only. In this instance a tenant’s surveyor would be looking for a discount in rent for this restriction upon rent review. However, it is possible for the hypothetical lease within the actual rent review clause to state that the property is to be valued on the basis of any use within Use class A1 retail and in this case there would be no discount benefit.
Dilapidations and repair
Limit your exit liabilities. If you are occupying an entire property on a Full Repairing and Insuring lease (FRI) you are liable for everything internally and externally. Make sure you are receiving adequate discount for taking an FRI lease if elements of the property are not in good repair at commencement. Alternatively request a schedule of condition in order that you need not leave it in any better, but equally no worse condition than the schedule indicates.
There is no second chance to revisit these terms once the lease is complete.
We always recommend that anyone entering into a commercial lease seek professional advice at the earliest opportunity. Brecker Goldsmith work in partnership with Adams Solicitors to ensure our clients receive a thorough service in commercial conveyancing matters. For further advice, please contact Nicholas Duck MRICS at nick@breckergrossmith.co.uk or 020 7908 2674 or Ruhel Alom at Adams Solicitors at ralom@adamslaw.co.uk or 020 7790 2000. |
