The Practical Lawyer

Landlord and tenant – commercial

Leases – regearing negotiations

As a result of the recession, lease regearings and extensions are becoming increasingly popular.

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L’s consent – new company

When deciding to give consent to a proposed assignment by T, L is entitled to take into account all relevant circumstances, and that will include the financial strength of the proposed assignee. But, can L object because the proposed assignee is a newly incorporated company?

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Assignment – L’s consent

T can assign the lease unless there is a covenant in the lease prohibiting this, or requiring compliance with pre-conditions. If there is an absolute prohibition then that will be the end of the matter; there is no implied requirement to act reasonably, and L needs no reason for any refusal.

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Break clauses – reminders

A reminder of the ‘who, when, and how’ of break clauses:

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LTA 1954 – contracting out

L and T can agree that T will not have the security of tenure provisions that normally apply under LTA 1954. Prior to June 2004, it was necessary for L and T to get a consent order from the County Court; these days, L merely serves a warning notice and T responds by signing a statutory declaration.

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AGA – negotiation

The property downturn has seen a renewed focus on the detailed wording of AGAs. For instance, in a recent CA case the terms of the AGA limited the guarantor’s liability to the period during which the assignee was ‘bound by the tenant’s covenants of the lease’.

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Empty rates – insolvent T

The three or six-month period of rates relief for empty properties begins to run from the moment the property becomes unoccupied – even if there is a T in administration or liquidation in occupation (who is, in any case, exempt from rates liability).

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Rates – empty

Since April 2008, unoccupied business premises no longer get the empty rates benefits that they previously enjoyed. Now, unoccupied commercial premises (eg retail or office) get a three-month exemption and then have to pay 100% rates (previously it was a three-month exemption, and then 50%).

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Covenants – third parties ‘benefit’

The Contracts (Rights of Third Parties) Act 1999 has proved to be a damp squib. Whilst it is an Act of enormous potential it has largely been killed off at birth by standard contractual clauses that exclude it from applying.

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Parking – regs

As the number of vehicles increases each year, so the pressure on parking spaces grows. To what extent can L alter or change the parking arrangements, by introducing new parking regs for Ts?

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