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When you decide to let your commercial property as another person’s business premises, you will likely negotiate a commercial lease. Initially, you may solely focus on the amount of money you will earn from leasing your commercial property. However, there are other factors you should consider, including the rental amount and lease term. It is essential that you consider the obligations that come with leasing your commercial property. Additionally, you should consider what to avoid when you negotiate a commercial lease agreement. A commercial lease agreement is a legally binding contract, so you must abide by it as a commercial landlord. This article will explain three essential things a landlord should avoid in a commercial lease agreement.
What to Avoid
As a commercial landlord, there are plenty of things you will want to avoid during your commercial lease. Below, we list six things you, as a landlord, should avoid in a commercial lease.
1. Lack of Legal Documentation
When you allow a business owner to occupy your commercial property, it is crucial that you avoid doing so at any stage without legal documentation to detail their occupation. This may sound like common sense, but commercial landlords can find themselves in this situation. For example, before negotiating a commercial lease, you should avoid allowing prospective commercial tenants to occupy the building, such as to carry out a fit-out. Instead, ensure you document occupation through a licence or a tenancy at will. Without doing so, you put yourself in potential problems if, for example, the business owner damages your property.
Also, at the end of your commercial lease, you should avoid letting your tenant occupy your property any longer than the lease term end date. Unless your lease is a lease with security of tenure, your tenant’s lease will end after the end term date unless you agree to a new lease. If you allow them to continue to occupy the property, they can become your period tenant, and eviction can be tricky. This is because your tenants could gain legal rights to remain, and you would have given a statutory reason for removal.
2. Not Sticking to Your Obligations
Naturally, as a landlord with a commercial lease, you must honour your lease agreement obligations; your commercial lease agreement is legally binding. However, an important thing to avoid as a landlord is failing to abide by the finer details, such as timeframes of obligations. This is particularly relevant to commercial landlords as you will often have to decide whether or not to grant your tenant consent to do something in the commercial lease. For example to:
- assign the lease;
- sublet the; property; or
- make alterations.
Your lease agreement will likely say that when your tenant asks you for your consent, it should not be “unreasonably withheld or delayed”. And even where it does not say this, it is implied by law. Therefore, you need to respond reasonably in terms of the circumstances, and for guidance, you should try to respond two weeks after your tenant’s request.
3. Wrongful Disposal
When you are part of a commercial lease, as a landlord, you should avoid wrongful disposal of your commercial tenant’s belongings. A situation could arise where you need to dispose of their belongings, such as if you evict your tenant. However, legally, you must give your tenant a reasonable amount of time to collect their belongings before you dispose of them. In such circumstances, best practice is to write to your tenants to let them know precisely what you possess and the time you will give them to collect them from you.
There are, of course, times when you can hold onto your commercial tenants’ belongings. This is where they are in rent arrears, and you use the Commercial Rent Arrears Recovery (CRAR) process. In this instance, the enforcement agent you allow to carry out the process can seize them after giving notice to your tenant in order to raise funds for the rent arrears. However, there is a strict legal process for this and rules you must follow.
This cheat sheet outlines what you should be aware of in your lease agreement.
Key Takeaways
A commercial lease is where a property owner like you allows a business owner sole occupation of your property. There are essential things you as a commercial landlord should avoid doing in a commercial lease, and this article has explained three of these. The article points out that it is crucial to avoid allowing a business owner to occupy your property without legal documentation in place, such as a commercial lease or tenancy at will. Also, as a commercial landlord, you should ensure that you carry out your lease obligations within the correct time frame, such as when your tenant requests your consent. Additionally, commercial landlords must avoid wrongful disposal of their tenant’s property.
If you need assistance in determining what to avoid when it comes to a commercial lease agreement, contact our experienced leasing lawyers 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. Call us today on 0808 196 8584 or visit our membership page.
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