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A commercial lease contains many rights and obligations, the details of which are in the commercial lease agreement. Commercial tenants and landlords must be aware of these rights and obligations and adhere to them during the lease term, as a lease is a legally binding contract. Some lease provisions state that a commercial tenant must gain consent from their landlord to carry out particular actions concerning the commercial lease. Not only is it important that a tenant knows when consent is needed, but they also know when commercial landlords can withhold consent. The commercial tenant may still have further rights when they do, and there are rules surrounding withholding consent, such as that a landlord must do so within a reasonable time. This article will explain what a tenant needs to know when a landlord withholds consent in a commercial lease.
When is the Consent of a Commercial Landlord Needed?
You must get your landlord’s consent to proceed when taking specific actions within your commercial lease. Two typical examples of when a commercial tenant needs to gain permission from their landlord in their commercial lease are:
- to make alterations to the commercial premises; or
- to assign the lease to a third party.
Assignment
Assigning a commercial lease is where the commercial tenant, as the assignor, transfers the lease and all the lease obligations to the assignee, who becomes the new tenant. Therefore, the original tenant is the outgoing tenant, and the new one is the incoming tenant.
Alterations with Commercial Landlord Consent
Consent to make alterations in the commercial premises may be necessary depending on the type of alterations and what the lease says. Often, non-structural alterations do not need consent. Where consent is required, unless the lease states that this is just through a formal licence from the commercial landlord, any other type of correspondence from them or an agent suffices.
What if a Commercial Landlord Withholds Consent?
A commercial tenant must understand the rules and their rights when a landlord withholds consent in a commercial lease for alterations or assignment requests. We will explore these below.
Alterations
If a tenant requests consent to make alterations to their commercial premises, unfortunately, no rules state the landlord has to do so within a specific time frame. There is also nothing to restrict the landlord from unreasonably withholding consent. Therefore, ensuring that the lease agreement details an exact period and that the landlord cannot unreasonably withhold permission for alterations is wise.
Whether or not a landlord unduly withholds consent depends on the circumstances of the alteration request and whether the landlord can reasonably justify the refusal.
Assignment
Withholding consent for the assignment of a lease is slightly different from alterations. The lease agreement usually states that the landlord must not unreasonably withhold consent for assignment. Where it does not state this, there is an implication that this applies.
This cheat sheet outlines what you should be aware of in your lease agreement.
Legal obligations arise when a landlord refuses consent. These consist of the following:
- to only refuse consent if there is a reasonable excuse not to consent, which includes, but is not limited to, where the tenant owes money, has not fixed a material breach of the lease, or the landlord is not satisfied with the financial ability of the assignee;
- to respond to the question of consent within a reasonable period;
- to provide reasons for any refusal as well as any details surrounding any consent; and
- where you need consent from someone else, such as a mortgage lender, to forward your application to them.
Where a landlord refuses consent for assignment, and you, as the commercial tenant, believe this was unreasonable, they can ask a court to provide a declaration to allow you to proceed with the assignment. You should note that where a commercial landlord gives multiple reasons for refusing consent, or unreasonable conditions for granting permission, the following applies:
- if some reasons are unreasonable, providing one is reasonable if given alone, the refusal is still reasonable; and
- where one condition for consent is not reasonable, the landlord has behaved unreasonably when giving consent.
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Key Takeaways
If you need to request consent from your landlord during your commercial lease, such as for alterations to or assignment of the lease, you should know about withholding consent. If your landlord withholds consent for either request, there are some rules around this.
Unfortunately, where they refuse consent for alterations unless you lease detailed rules on this, they do not apply. However, this differs if the request for consent is for improvements. Where you request consent to assign the lease, your landlord cannot unreasonably withhold consent, as the law details. Where your landlord withholds consent for improvements or assignments, you may be able to approach a court for consent.
If you need help understanding what a commercial tenant needs to know when a landlord withholds consent in a UK commercial lease, LegalVision’s experienced leasing lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. So call us today on 0808 196 8584 or visit our membership page.
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