Commercial Law Updates


Rubbish

QUESTION: “I own a parade of shops. One of the retailers leaves its rubbish outside its store on a communal forecourt. A customer has tripped over some of the scattered rubbish and is claiming damages for injuries. Am I liable?

The ...

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Overage

"I own a commercial building that a developer wants to buy but will only pay the current use value. The land will be worth four times as much when it receives planning. Would an overage clause be a good idea?"

The most certain way of shar ...

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Subletting

"My landlord would not allow me to sublet at a rent below the market level. I agreed a market rent, but the landlord is now concerned about the financial viability of the subtenant. Can he keep moving the goal posts?"

No. Assuming your le ...

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Return of Deposit

"A buyer who fails to complete the purchase of a property may still be able to recover the deposit paid on an exchange of contracts."

THE CASE The High Court has had to consider for the first time whether a contract term is enforceable if ...

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Subletting

"My tenant has asked me to agree to a subletting of its premises at a lower rent than it is paying. Its solicitors say I have to agree as I will continue to receive the full rent under the main lease. Is that correct?"

Not necessarily. Wh ...

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Break Notice

“My tenant served a break notice to terminate its lease but has now asked whether it can stay. I am happy to agree to that, but what should I do next?”

A break notice cannot be unilaterally withdrawn or waived by your tenant alone, but it ...

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Limited Liability Partnership

 


“I have appointed the same consultant on a series of projects for several years. It has now told me that it is converting from a partnership to an ‘LLP’. What is this and how does it affect me?”

An LLP is a Limited Liability Partnership. ...

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Overage

 


“I am a housebuilder who has agreed to pay overage to the seller of land. The seller requires a restriction against the title at the Land Registry. How do I stop this affecting plot sales?”

Sellers often want to share in the gain when the ...

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Licence

 


“I have been granted a licence to use business premises that I now want to terminate. Are there any restrictions on me doing so?”

The first question to decide is whether what has been granted is a licence or a lease, because this will aff ...

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Schedule of Condition

 


“I am about to lease some offices. However, the space is in poor condition and I will have to carry out repairs. How much will I be expected to do myself?”

As a tenant, you will be expected to sign a lease that includes an obligation to k ...

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Boundaries

 


“I own registered land but the boundary shown on the Land Registry’s plan is not the boundary that has been accepted between me and the neighbouring owner. Can I get the Land Registry to change its plan?”

Most Land Registry boundaries sho ...

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Chancel Repair

“I occupy commercial premises and my company has received a demand from a local parish church for payment of the annual church rate. Is this the same as chancel repair liability?”

The notice is headed ‘Formal notice of church rate d ...

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Rent Deposits

 


“I am a residential landlord and use an approved scheme to hold deposits. Outgoing tenants often want the money back quickly to pay for their next flat. Can I pay this myself and recover the money from the deposit holder?”

You can but the ...

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Service Charge Reserves

 


QUESTION: I run a shopping centre with a service charge. The leases allow for a reserve fund. A lease has just ended and the tenant wants its share of the reserve fund back. What do I do?

Firstly, I would investigate what exactly the lea ...

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Parent Company Guarantee

 


QUESTION: I am a landlord negotiating to let my office building to a new company backed by a parent company guarantee. Does this give me the same covenant strength as if the parent company were the tenant?

There is some doubt, leases with ...

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Equity Release

 


QUESTION: Is equity release the answer to help raise funds for senior citizens who own a largish property but are short of cash. What is a home income plan and should this be considered and what are the facts?

There are two types of home i ...

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VAT And Reverse Premiums

 


QUESTION: Is a reverse premium for the surrender of a lease or an inducement to enter into a lease subject to payment of VAT?

Revenue and Customs’ guidance says that if a landlord accepts the surrender of a lease in return for payment from ...

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Mezzanines

 


QUESTION: Do I need planning permission to install a mezzanine?

The installation of a mezzanine does not require planning permission unless there is a ‘planning condition’ that prevents this. Under section 49 of the Planning and Compulsory ...

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Group Companies

 


QUESTION: I am the landlord of a retail property that I let to a substantial company that has ceased trading and has no assets. A group company occupies the premises and another pays rent. Am I obliged to accept the original company as tenant on leas ...

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Charity Tenant

 


QUESTION: The 42-year lease on my restaurant/pub is coming to an end. The tenants refitted the building. Should the new rent disregard the original fit–out, and is the lease outside the 1954 act because I have charitable status?

Charitable ...

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Fitting Out

 


QUESTION: My client is entering into a new lease, and the landlord will be contributing to their fit-out costs. The landlord says these costs come under the construction industry scheme (CIS). Is this correct?

In most cases this will no lo ...

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Compliance With Break Clauses

 


QUESTION: My company needs to relocate. Our lease has a tenant-only conditional break, effective in 18 months’ time. How can we ensure we are compliant of the break?

This is critical when dealing with a lease break. Every lease is differen ...

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Repairing Covenant

 


QUESTION: What is meant by a covenant ‘well and substantially to repair’?

A covenant ‘well and substantially to repair’ does not require the tenant to put the property into perfect repair or into pristine condition.

In Riverside ...

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Endeavours

 


QUESTION: What is the difference between the contractual terms ‘reasonable endeavours’ and ‘best endeavours’?

It is not unusual to come across an obligation to use ‘best’ or ‘reasonable’ endeavours, but it is difficult to pinpoint how thes ...

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Delayed Rent Review

 


QUESTION: I acquired my first restaurant a year ago. At the time there was a rent review holding over from the previous tenant but I have heard nothing, Can this rent review be backdated or has the landlord lost its rights?

Not necessaril ...

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LLP Tenant

 


QUESTION: My tenant is converting from a partnership into a limited liability partnership. I have been asked to consent to the assignment of the lease from the partnership to the LLP. What should I do?

Consider what, if any, obligations yo ...

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Time In Rent Reviews

 


QUESTION: I occupy offices and the Landlord has written that it wants to action a rent review from 2004. Time is not of the essence. Is it reasonable to demand an uplift in rent so long after the review date?

A tenant often considers that ...

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Renewal of Sublease

 


QUESTION: My subtenant is vacating premises just three days before my own lease expires. Am I entitled to renew my lease even though I am not in occupation?

You do not need to be in physical occupation of premises to preserve your statutor ...

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Accuracy Of Plans

 


QUESTION: I have been told that details of any new lease exceeding seven years must now be recorded with the Land Registry. I have also been asked to provide better plans than were in the original documentation. Why is this?

Since October ...

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Contracting Out

 


QUESTION: I am a landlord, and a lease which is contracted out of the security of tenure provisions has expired. I want to charge rent while negotiating a new lease but not create a protected tenancy. How can I do this?

It is often the cas ...

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Islamic Compliance

 


QUESTION: How can I ensure my property arrangements are complaint with Islamic Law?

Muslims are prohibited from taking standard mortgages to help them buy a property because they involve paying interest, a concept not compliant with Sharia ...

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Rent During Renewal

 


QUESTION: I have started negotiations with my landlord to renew my lease, but the premises are over-rented. Can I get the rent reduced while these negotiations are ongoing?

If you cannot reach agreement with your landlord, you can make an ...

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Insurance Of Tenants' Works

 


QUESTION: I have appointed a contractor to make changes to the layout of the offices where we are tenants. Are we responsible for insurance of the works or is this the landlord’s responsibility?

In most cases, cover falls within the basic ...

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Pension Schemes

 


Question: Does ownership of a property in a self-invested personal pension create difficulties in the event that I wish to retire or if I die before retirement?

Careful planning should ensure that purchase of a commercial property within a ...

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Fire Certificates

 


QUESTION: Is it true that I no longer need a fire certificate for my building?

No. A fire certificate is still required. However, on 1 April 2006 the Regulatory Reform (Fire Safety) Regulations come into force and fire certificates will be ...

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Green Leases

 


QUESTION: How can I ensure my tenants do not undermine my building’s green credentials? I have heard about green leases. What do these entail?

As a formal agreement, a lease requires professional legal advice on its compilation.

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Subletting

 


Question: I recently bought a buy-to-let flat. The block’s freehold is owned by the leaseholders. The lease states that I cannot let the flat without the consent of the landlord company. I don’t get on with the secretary of the leaseholders’ associat ...

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Options And SDLT

 


Question: I have just entered into an option agreement for the purchase of land. Do I have to pay any Stamp Duty Land Tax?

Many developers are still unsure about the rules concerning Stamp Duty Land Tax (SDLT) and option agreements. It is ...

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Lease Extension

 


I need to sell my maisonette, which has a 65 year lease. I have a buyer, but the lender will not provide funds until the lease has been extended. The freeholder advised me to get an independent valuation to increase the lease by 90 years and submit t ...

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User Clause

 


Question: I occupy a property as a newsagent, but the ‘user clause’ allows me to use it as a takeaway. During a rent review will I be charged based on takeaway, which on my parade would attract a higher rent?

The user clause in your lease ...

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Public Access To Land Registry

 


Question: I have heard that anyone can get a copy of the mortgage of my house or lease of my business premises from the Land Registry, but this cannot be right can it?

A title property at the Land Registry will describe the property, ident ...

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Consent To Assignment
Question: My tenant wants to sublet a company of poor financial status. Do I have to consent?

Not necessarily. A landlord may refuse consent if it has genuine concerns about the effect that a weak subtenant might have on the value of its ...

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Buying Commercial Property - Ten Top Tips

 


1.    You need to understand yield and what happens to rents and yields since this determines how and when you should decide when to sell. In considering yields you need to know whether you want income or capital growth.

2.    Always use an app ...

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Grazing Rights

 


Question: I am buying a property where part of the garden is being used by a neighbouring landowner for grazing animals. Is it possible to easily terminate any agreement that may be in place?

It depends on the terms of the agreement, but c ...

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