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Commercial Lease Check List
Landlord & Tenant
Did you know that a commercial lease falls under the Landlord and Tenant Act 1985? The landlord could also be the freeholder (some landlords are subletting leaseholders), whilst the tenant is the leaseholder. In relation to commercial lease, the tenant will also be a business owner. Commercial leases should not be confused with residential leases
Unsigned Commercial Lease
Suppose you have a commercial lease but you haven’t signed it yet. How legally bound would you be? Would you have any obligations and responsibilities? Should a formal contract renewal be expected, if the lease came to an end? What if the tenant was allowed to occupy the property? Would the running over of the previous contract suffice?
Before signing a commercial lease, have in place the following check list:
- Property solicitor to review lease terms
- Accountant to review finance (inc. budget and forecast)
- Exit plan
- Personal liability
If you haven’t ticked these 4 essential tasks before signing a commercial lease, don’t sign it at all.
Statutory Rights and Unsigned Commercial Leases
Clauses in a commercial lease have significant implications for both tenant and landlord. Commercial leases without formalities are a high risk. A tenant could have statutory rights even if the lease hasn’t been signed. The landlord could get a court order to evict the tenant. Compensation might be sought, including the right to remain in the property, as well as the right to renew the lease. This could happen with or without the landlord’s willingness to do so.
Commercial Leasing Specialists
Whether you’re a tenant or a landlord, we strongly advise you to contact a property solicitor who will help with the check list above and identify any issues relating to a commercial lease. You need to spend time reading the lease and then have a solicitor review the lease terms. A property solicitor will breakdown the clauses and terminology into simplified English, so that you are fully aware of the benefits and implications of any of the clauses set out in the lease.
Read the contract and highlight anything you don’t understand or anything you’re unsure about. Your property solicitor will help you understand what’s in the contract and will also suggest any amendments. New clauses may be added to a commercial lease (eg. an agreement that the landlord will not raise the rent after a year of tenancy). SG
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