Commercial leases can be complex, even for people who have run businesses for a long time or leased several properties from which they operate.
Understanding your rights and responsibilities is crucial to ensuring you can build a good relationship with your landlord and minimise the possibility of any disputes occurring, which can cost you money, inhibit your ability to run your business and even damage your reputation.
Your lease agreement
The obligations of you and your landlord must be outlined in a commercial lease agreement prior to occupancy. This is a key, legally binding contract, so we highly recommend that yours is drawn up by a solicitor to protect your interests by ensuring terms are fair and compliant, with all points and eventualities covered.
Once the lease agreement is drawn up and signed by you and your landlord, both parties must adhere to it otherwise the agreement may be deemed to have been breached.
What should a lease agreement include?
Below is a brief outline of what should be included in a lease agreement as a minimum:
- Your name, address and contact details, as well as those of the landlord
- A detailed description of the property and the areas the agreement relates to
- How the property will be used and operating hours
- Start and end dates (typically 12 months minimum) and renewal terms, including the notice period
- Rent costs and terms of the lease, plus how any increases will be implemented
- Additional charges, such as maintenance or utility bills
- Your deposit and the conditions under which it will be returned or retained
- The maintenance and repairs you and your landlord will be responsible for, and health and safety
- Approvals for any improvements or modifications made to the property
- Insurance you and your landlord will hold
- Who will be responsible for property taxes
- Operating expenses, including communal areas
- Sublease and assignment terms
- Default and termination conditions
- How disputes will be managed and resolved
- Provision for events such as natural disasters or landlord bankruptcy
What are your rights as a commercial tenant if your landlord fails to comply?
As well as the requirements set out in your lease agreement, and assuming you are complying with the terms, your landlord should permit you ‘quiet enjoyment’ which enables you to use the property without interference.
If your landlord fails to comply with this or something else outlined in your lease agreement, they may have breached that agreement.
Your rights begin when you enter a legally binding, valid commercial property lease. You continue to have rights until it ends and sometimes beyond.
To find out more about how the law protects you, read our blog ‘commercial landlord and tenants’ responsibilities – legal obligations you should know’.
Resolving disputes
Although legal action is sometimes necessary, we recommend first trying to talk constructively to your landlord to resolve the issue, unless a serious breach has occurred, such as failing to provide safe premises which results in death, injury or accident. Not only will this be less costly and stressful than involving a solicitor, but it will also help to maintain a good relationship with them.
Always raise issues at their initial stages before matters escalate and become more difficult to resolve.
Log details of all meetings and follow them up with letters and/or emails so you have written evidence of your conversations. Also note details of all incidents that relate to the dispute, including dates, times and locations. Take photographs and videos where possible. This evidence may be needed in the event that the dispute reaches the courts.
If that approach fails, mediation may be necessary. This is where an impartial third party facilitates future-focused discussions to reach an amicable agreement. Courts sometimes insist mediation is attempted prior to beginning proceedings.
If mediation also fails, legal action may be necessary to find a satisfactory outcome.
Going to court
Going through the courts can be stressful and should be viewed as a last resort, as the high costs may outweigh any damages you might be awarded.
In England and Wales, courts have a procedure they must follow for commercial property cases. This is:
- Attempting to resolve the dispute through communicating and exchanging information, as outlined above
- Sending a formal letter to your landlord outlining the dispute, the basis of the claim and how you want the dispute to be resolved
Court proceedings are then initiated and:
- Your landlord must acknowledge the service of the claim within a set time period
- They can then file a formal defence and respond to the allegations made
- They may submit a counterclaim if they have claims against you
- The court may schedule a Case Management Conference to discuss the case
- Both parties will then be required to exchange evidence. Statements from witnesses and experts may be used
- A pre-trial review would only thereafter be held if the court deems this to be appropriate
- If settlement has not yet been reached, the case then goes to trial and a judgment will determine the outcome. This can be appealed if you or your landlord are dissatisfied with a point of law that was considered
How AGR Law can help
Entering into a commercial lease is a significant commitment, so we urge you to contact us prior to signing a lease agreement, however nice a landlord may appear and regardless of anything they verbally promise.
If disputes occur, our team will fight your corner to resolve them, minimising stress for you and disruption to your business.
Contact our team on hello@agrlaw.co.uk or call us on 0116 340 0094.