In Short
- Verbal agreements may be binding: Verbal permission to change your property’s use isn’t automatically void, but it can be hard to prove.
- Keep written records: Always follow up verbal agreements with a written confirmation, such as an email.
- Landlords may be “estopped”: If you’ve relied on the permission and made investments, the landlord might be legally prevented from revoking it.
Tips for Businesses
If you agree to a change in permitted use with your landlord, get it in writing — ideally by updating the lease. Even if it starts as a verbal agreement, follow up with a written confirmation to protect your position and reduce the risk of future disputes.
Table of Contents
As a commercial tenant, you may have some concerns about the permitted use of your property and whether this can be modified by agreement with the landlord. In some cases, you may have agreed to this verbally, and you are unsure whether this can be enforced. This article covers the validity of a verbal agreement for change of permitted use, and more specifically, whether this can be revoked.
This cheatsheet includes practical tips to understand key clauses and avoid disputes in leasing agreements.
Permitted Use
When you sign a lease, you will usually know how you are allowed to use the space and whether it suits your business. The lease will typically include a ‘Permitted Use’ clause that outlines a narrow, specific use for the property. An example of this would be “use as a café for the sale of hot and cold food and beverages”.
You should note that this is different from the Use Class of the premises, which is set by the local authority and can usually only be changed by planning permission. For example, if you are running a small cafe, you will typically need premises with Use Class E. This means that, at the council level, the property can be used for this type of business. Changes within a use class usually will not require a change of use application.
The ‘Permitted Use’ clause may mention this use class too. If you ask the landlord to approve a change of use, it only affects the Permitted Use clause — not the Use Class.
The Agreement
Verbal agreements can be legally binding, but they are more complicated to prove and often more difficult to enforce if a dispute arises. It is always preferable to get things in writing, particularly when dealing with commercial property. A lease will ordinarily try to exclude variations to the lease which are made verbally, but often, landlords will not follow the lease processes and instead insist on trusting their word. In these situations, verbal permission is not automatically void for a change of use.
You should always try to document any verbal agreement made with the landlord in writing. For example, you could send them an email confirming the discussion and agreement.
If you invest or make changes based on permission, the landlord may be legally prevented from withdrawing that permission later. This legal concept is called “estopped”, and it can prevent the landlord from going back on their word.
This is especially true if revoking the permission would cause you substantial financial loss.
You should note, however, that most commercial property transactions will involve solicitors. You and the landlord can agree on specific wording for a new ‘Permitted Use’ clause after a verbal agreement.
Keep a written record of the agreement to ensure both parties fulfil their commitments.
Key Takeaways
While a landlord may technically have the right to revoke verbal permission for a change of use, the reality is often more complicated. Factors such as the tenant’s reliance on the permission and any resulting investments can play a significant role. To avoid disputes, both parties should always strive for clear, written agreements.
If you need assistance in navigating the validity of verbal agreements in your permitted use clause, our experienced leasing lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to solicitors to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
Verbal agreements can be legally binding, but they are much harder to prove than written agreements. In commercial property matters, it is always best to obtain written permissions and changes.
It is usually best to have a commercial discussion with them, as they might simply have forgotten. In any case, you could send them evidence of the agreement and any actions taken in reliance on the agreement.
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