Who Creates the Lease Agreement for a UK Commercial Lease?

A commercial lease is a huge commitment for a business owner and likely one of their main expenses. In addition, a landlord takes a risk with their property investment when they lease it to another party. Therefore, commercial leases must have a commercial lease agreement to clarify the rights and obligations of the business tenant and the commercial landlord in the commercial lease. This article will explain who creates the lease agreement for a UK commercial lease.

Commercial Lease Agreements  

A commercial lease agreement is a written, legally binding contract between a commercial landlord and a commercial tenant. It contains all the details about their commercial lease for the tenant’s use of the landlord’s property. These details include basic details about the lease, such as, for example:

• names and addresses of parties to the lease;
• details of the property concerned; 
• what areas of the property the lease covers;
• the rental amount; and
• the lease term is the time period agreed for the lease to run.

Commercial lease agreements also detail both parties’ rights and responsibilities in the commercial lease, which detail more complicated terms. For example:

• any rent review clause;
• details regarding termination of the lease, such as a break clause;
• repair obligations; and
• alienation covenants.

Therefore, drafting a commercial lease agreement can be a detailed and challenging task but essential for any commercial lease.

Creating the Lease Agreement

A UK commercial lease agreement plays a critical role in a commercial lease, so it must be created properly. The agreement should account for potential problems that may arise between the landlord and tenant in the commercial lease, and how to deal with them. In addition, it should eliminate any confusion on parties’ rights and responsibilities. 

Also, it is a huge financial commitment for the commercial tenant, so if the lease is poorly drafted, it could cost. 

Unfortunately, some commercial landlords will buy a template lease agreement online and try to tailor it to their needs. However, they likely need help understanding all the terms and conditions of the lease agreement. Therefore, getting an experienced property solicitor to draft the lease agreement is advisable. 

Creating a Lease Agreement

The first step to creating a lease agreement is for both parties’ legal representatives to discuss what it will contain and record this in a written document (the ‘heads of terms’). Once agreed, the landlord’s solicitors usually draft the lease agreement. They will draft this agreement based on the heads of terms and should pass the tenant’s solicitor the draft lease documentation for their and the tenant’s review.

Key Takeaways

A commercial lease agreement should be created between the parties by their legal representatives and commercial property solicitors. The latter has the competence to understand property law and what you need in your lease agreement. If you opt for a template lease agreement and tailor it yourself, you could run into problems during the commercial lease as its details are not always clear to the parties. Whilst the landlord and tenant will negotiate on the lease terms and confirm these in the heads of terms, the commercial landlord’s legal representative will usually draft the agreement and then run it by the tenants’ equivalent for approval before parties sign.

If you need help understanding which creates the commercial lease agreement 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. So call us today on 0808 196 8584 or visit our membership page.

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