Solicitor Ed Williams, in our Commercial Property team, highlights some of the mistakes that businesses and other organisations make when leasing a property.
Leasing commercial property is a significant commitment for any business. While the end result is often clear, the process of achieving it may not be, and can be fraught with legal pitfalls. To help you navigate this complex area, here are some common mistakes—and how to avoid them.
Failing to Understand the Lease Terms
Since leases often include complex and detailed terminology, tenants can enter into leases without fully understanding obligations such as:
- Repair and maintenance responsibilities: Most leases require tenants to repair the property, the extent of which will be set out in the lease. It is therefore important to understand the extent of the property, which will dictate if the tenant is responsible for the whole building or the interior only, and to what standard the property must be repaired.
- Break clauses: Misunderstanding the conditions of break clauses can make it difficult to exercise the break option. This is because non-compliance can void the break.
- Other: If the tenant can assign, underlet or share occupation, the state of which the property must be returned to the landlord and what works the tenant can complete.
Solution: Ensure you understand the lease its implications on your business and seek professional advice if you do not. Attempting to navigate a commercial lease without professional help is a common mistake which is often made in order to keep costs low for the tenant. This is of course a valid reason, but it must be balanced against the costs of overlooking a clause/responsibility that can lead to potentially higher cost consequences later.
Not Negotiating/Amending Terms
Many tenants assume lease terms are fixed and fail to negotiate for better conditions. For example, landlords may be willing to adjust the rent-free period, repair obligations, or break clauses if approached. The tenant or their solicitor should also ensure the drafting includes suitable conditions and clauses and represent the agreed terms. This will involve a detailed review of wording. This can appear unnecessary, but is especially important on break clauses or conditions of assignment. Not checking these conditions can be costly and disruptive if not accounted for in the agreement as they may hamper a tenant’s ability to dispose of the lease.
Solution: Engage a solicitor and a commercial agent to negotiate on your behalf. They can help secure more favourable terms that align with your business needs.
Conclusion
By avoiding these common mistakes and seeking professional advice, you can protect your business from unnecessary risks and set yourself up for long-term success. When in doubt, seek legal advice to ensure compliance with the relevant requirements.
If you need legal advice in relation to a lease, please do get in touch with our Commercial Property team.
For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800.
This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.
