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When you agree to a commercial lease agreement, this represents a significant commitment as it is a legally binding document. Whether you are a commercial landlord or tenant, you must comply with the lease obligations. You must also honour the rights of the other party to the lease. However, despite both parties’ best efforts, there inevitably will be a dispute regarding the lease agreement. There are various ways to deal with this, including going to court. This article will discuss resolving a lease dispute by going to court.
Initial Approach to Resolve a Lease Dispute
As a commercial landlord or tenant, you likely know that attempting to resolve your dispute outside of court is the best first step. Constructive dialogue and a willingness to negotiate by both parties can mean you reach a mutually satisfactory outcome sooner. This can be the most effective process. Parties who fail to reach an amicable settlement may turn to alternative dispute resolution (ADR) procedures such as mediation. This independent process may result in an agreement which both parties accept.
Going to Court to Resolve a Lease Dispute
Going to court to resolve your commercial lease dispute should be considered a last resort. You should only exercise this option when negotiations and ADR have failed.
Going to court will naturally be costly and time-consuming for the parties to a lease. Also, it is wise to consider whether going to court is a suitable option for your lease dispute. Litigation may not solve your lease dispute as lease disputes vary in nature and can be quite complex.
Which Disputes Should You Take to Court?
There are specific lease disputes where going to court is the most suitable action for the commercial lease dispute. For instance, if you, as a commercial landlord, want to regain possession of your property, court action may be necessary. Court action may be required if you have already considered peaceful re-entry for forfeiture first.
Considerations Before Going to Court
You should consider several things before going to court for your lease dispute. A key consideration is keeping a log of the issues and incidents leading to the dispute. This can include, for example, photos and videos. A court will likely want to consider these when finding a resolution.
You must also consider seeking legal advice before going to court. Court fees can be high, and you want to ensure that any damages the court may award outweigh them. You should engage a legal representative as soon as possible once you decide court action may be necessary.
You will also need to consider any damage that going to court could cause for your business.
Possible Outcomes From Going to Court:
Going to court for a commercial lease dispute can bring about different results. For example, some of the results that are possible include:
- a distress restraint on behalf of a commercial landlord on the commercial tenants’ goods on the premises;
- receipt of rent arrears from a commercial tenant;
- to get a resolution for a service charge dispute;
- to resolve commercial tenant repair issues; or
- to resolve a lease extension issue.
When considering going to court for a commercial lease dispute, check if the Pre-action Protocol for Debt Claims (PPDC) applies to you. This outlines how to conduct yourself in the run-up to and during the proceedings. For example, the Pre-action Protocol has guidelines on what information you should set out in the initial letter of claim.
Commercial lease disputes involving rent arrears are best solved via court proceedings. If your tenant owes you rental payments, Money Claim Online (MCOL) is HM Courts & Tribunals Service Internet-based service that can assist you. You can lodge a submission via their website, provided you know the exact amount your tenant owes you. Once you complete and submit your claim, the court will send you a claim pack. The court should do this within two days. After five working days, your commercial tenant, the defendant, has exactly 14 calendar days to respond.
This cheat sheet outlines what you should be aware of in your lease agreement.
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Key Takeaways
Commercial tenants and landlords may sometimes have a lease dispute with the other party. If you are involved in a lease dispute, it is advisable to resolve it through communication with the other party. However, this is not always possible. Instead, you may find going to court is an option to resolve your commercial lead dispute. For example, you may go to court to collect your tenant’s rent arrears. Similarly, you may go to court to agree on a lease extension. Before going to court, it is wise to check if you need to comply with the PPDC. You should also note that fees can be high if you take a lease dispute to court. As such, you should always seek legal advice before going to court.
If you need help determining whether it would be beneficial for you to resolve your commercial lease dispute in court, 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.
Frequently Asked Questions
A commercial lease dispute is where a commercial landlord and tenant disagree on an issue within the commercial lease.
Having your commercial lease dispute decided by a court should be a last resort. However, it may be necessary, mainly if you are a commercial landlord seeking possession of your property.
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