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A commercial lease is where a property owner allows a business to occupy its property for a specific time frame. In return, the tenant will pay rent for the commercial property. A commercial lease agreement contains all the details of a commercial lease, such as the rental amount and the rights and obligations of both parties. One such lease term is an easement. As easement is a legal right a tenant may benefit from servient land. It is crucial that you abide by a commercial lease agreement, or you risk breaching the commercial lease. This article will explain what you need to know about easements in commercial leases.
What is an Easement?
A property owner can grant an easement from their ‘servient land’ to another property owner who, therefore, has the ‘dominant land’. The right allows the person with the dominant land to use the servient land for a particular purpose. An easement may cover the whole property or land or a part of it. The rights an easement can grant may cover a variety of privileges, such as:
- to lay water pipes;
- running services over the servient land;
- to access property through the use of a path; or
- the ability to join two properties.
Therefore, a right of way is a type of easement. This may be a right of way agreed upon between two property owners or a public right of way, which is ‘the right to roam’.
Easements may be express, which is where the property owner permits the right either through a
- lease;
- Land Registry Official Copies; or
- in a deed.
Alternatively, an easement can be granted when people have been using certain land for a specific purpose over several years, for example, a public right of way.
Easements in Commercial Leases
When you enter a commercial lease, you may find that the property it concerns has easements attached to it. A typical type of easement attached to a commercial property may be a right of way. For example, the following easements could apply to commercial premises:
- the back of a retail premises, such as a shop, may grant a right of way for deliveries for occupiers of neighbouring premises; or
- the forecourt of commercial premises may allow neighbouring occupiers to pass through it on foot as a right of way.
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Potential Disputes
If your commercial lease contains easements that grant a right to you (as the occupier of the dominant land) to use another occupier’s land, you should be able to do so without interference. This is a crucial point to note if you have a commercial lease. Indeed, interference in an easement can affect the operations of a business and is a type of private nuisance. Taking the first example above, interference with this easement could prevent the business owner from receiving deliveries and, therefore, their ability to conduct their business smoothly.
On the other hand, your commercial lease might grant an easement to another occupier from you (as the occupier of the servient land). Here, you may find the occupier of the dominant land takes advantage of the easement. This means they may be going over and above what the right prescribes. Taking the second example above, this would mean the occupier of the dominant land constantly walking and lingering on the forecourt for no specific reason rather than using it to get from one place to another.
Easements in a commercial lease also give rise to boundary disputes. This is particularly likely for a new occupier of a commercial lease who may not be familiar with where the boundary is or has a different view on this. Disputes can also arise if a person decides to develop the land.
Registering Easements
If your commercial lease is for less than seven years, i.e. a short-term lease, you cannot substantively register the lease at the Land Registry. However, if the lease grants an easement to another occupier’s land, and you have the dominant land, you may wish to register it with the Land Registry. Notably, you will require consent where the freehold title to the property has a restriction stating you can only register a disposition with third-party consent.
Registering an easement in a commercial lease ensures that the right the easement grants you as the occupier of the land is protected. It will not have legal effect if you do not register it against a landlord’s registered title with the Land Registry. Instead, it will be what is known as an equitable easement. What this means in practice is that if the right of the easement needs enforcement at any point, the courts will decide if it should be or not. However, a legal easement is enforceable in its own right, so not at the courts’ discretion.
Key Takeaways
Easements are rights that a property or land owner (of the servient land) grants to another property owner (of the dominant land). It is important to understand if your commercial lease contains easements so you know how others can use your property and how you may be able to enjoy others.
If you need help understanding easements in a commercial lease in the UK, our 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. Call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
An easement is a right that one property owner prescribes for another on their land, such as a right of way.
Registering an easement in a commercial lease ensures that the right the easement grants you as the occupier of the land is protected. It will not have legal effect if you do not register it against a landlord’s registered title with the Land Registry.
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