Commercial Property Focus - May 2010
Negotiating Leases : What information should be included in a
Commercial Lease ?
Comprehensive Heads of Terms should deal with
the key information to be included in the Lease.
Beside basic information such as parties,
rent, property description and key dates particularly with a lease
of premises to comprise the whole or part of a larger development
key matters must be
Tenants covenants with particular regard to
the extent of repairing obligations taking into account
defect/warranty matters
- Landlords covenants with particular regard to
Estate/service charge and insurance matters
- Rent review assumptions appropriate to the
premises
- Provisos such as break rights and whether the
benefits of long term security of tenure under the Landlord and
Tenant Act 1954 apply
- Landlord and Tenants Works provisions insofar
as not covered under a separate agreement
It is expected a Landlords lawyer will submit
a draft Lease appropriate to the nature of the premises and the
structure of the deal.
In particular the Lease should be :
- Proportionate to the size of the deal i.e.
for a smaller , lower value deal a more straightforward lease form
may be appropriate
- For a larger higher value deal a more complex
form may be justified and necessary
- HM Land Registry compliant
- Drafted in a clear and plain speaking
style
A Landlord will want some consistency in Lease
terms particularly if he owns other adjoining units.
Issues that should not cause Landlords
problems in including may be :
- Addition of qualifications to certain tenants
covenants e.g. subject to reasonableness and lack of delay
- Points of clarity in drafting e.g. rent
review dates
- Amendments to cater for tenants specific
requirements e.g. access rights/parking
Issues which a Landlord is likely to have
difficulty with including may be :
- Personal concessions
- Solus user rights
- Service charge concessions
- Repairing concessions
Thought to these matters at the outset in the
Lease in a fair, pragmatic and commercial way and then recording
them in the Heads of Terms will help ensure an appropriate form of
Lease is produced and will help get the deal done.
Clive Bleasdale is the Head of
Commercial Property at Weightmans LLP, clive.bleasdale@weightmans.com
This article will also be appearing in
the North West Insider Commercial Property Guide.