A commercial lease is essentially a contract between a landlord and a tenant. It allows a tenant to occupy a property for a certain length of time, subject to certain rights and obligations that are set out in the lease. Our commercial property solicitors carefully draft, review and negotiate commercial leases to ensure they include vital terms and conditions and prepare for the duration of the lease.
Each commercial property, the tenants and landlords involved are different and have different circumstances. A commercial lease is usually no longer than 25 years and modern leases can often be for only 5 to 10 years. Contrast this with longer investment leases which will be for 99 years or longer.
If you are acquiring an existing lease then the landlord’s consent is likely to be required. You should therefore ensure that consent is agreed in principle although it will probably need to be formally documented by way of a Licence to Assign.
A Licence to Assign is a document confirming the landlord’s consent to a tenant transferring an existing lease. Often, an outgoing tenant will need to pay the landlord’s legal costs in providing this document.
As an existing lease will already be in place, you will not be able to negotiate the terms unless the landlord will agree to formally vary the lease. You therefore ought to be prepared to accept the existing terms and should review them carefully at the outset. We regularly act for buyers of leases (known as an “assignee”) and assist in ensuring the existing lease terms allow the property to be used for the buyer’s intended purpose.
Our role usually also includes (depending on the value or length of term of the lease) reviewing the landlord’s land registry title, issuing and reporting on property searches, raising enquiries with the outgoing tenant’s solicitors and generally managing the whole process. Careful consideration should be given to the buyer’s intended use and whether any further consents are needed for fit-out works, for example.
Our team can also assist with Stamp Duty Land Tax and Land Registry applications which are frequently required.
Whether you are a landlord or a tenant, it is important that you understand the details of your commercial lease and know the extent of your rights and obligations. Our priority is to negotiate the best terms for you and help breakdown the legal jargon so that you can clearly understand your rights and obligations.