Buying, Selling Or Leasing Commercial Property

Agreements for lease are ordinarily used when the Tenant cannot immediately occupy the property. Taking on a commercial property is a significant investment (both in time and money) and any prospective Tenant is unlikely to want to pay full rental rate when they are unable to occupy the property fully for their use.

An agreement for lease allows the parties to agree for the Tenant to enter the property in the interim to fit out and get the property up-to-scratch so that they can commence trading immediately on the commencement of the lease, with the comfort that the Landlord is dealing with them exclusively and the property will not be let to another.

The benefit to the Landlord is that an agreement for lease secures the deal, and establishes a reasonable timescale for the conclusion of the contract. The Landlord knows that, subject to the terms of the Agreement, the Tenant will be obliged to complete on the Lease.

Entering a new lease is an extremely important time in the relationship of Landlord and Tenant. At the early stages  everything is amicable, the deal is in the process of being agreed and everybody is happy.

For a tenant, it’s not just a case of signing up to a Lease and paying the rent, but knowing the responsibilities that go with it, such as repairing and decorating and possibly the need to pay service charges. For the landlord it’s not just a case of hoping the tenant pays rent, but knowing who is responsible for repairs and knowing what happens at the end of the term.

Changes to an existing lease

During the term of a lease, Landlord or Tenant may decide that there are certain clauses within the lease that need changing, or problems with the property that the lease prevents being resolved. If this is the case, our commercial property specialists can assist by considering:
• A licence to assign (passing the responsibility of tenant onto another party, who will assume the role of tenant)
• A licence for alterations (an agreement between the parties to alter the property in order to make it more suitable for the tenant)
• Surrenders (the parties agreeing for the lease to come to an end early)
• Break notices (the lease may contain a clause which establishes either party may end the lease at a certain date, and upon certain conditions)

Despite everyone’s best intentions, sometimes disagreements can arise which is where our litigation and dispute resolution specialists can help: typically this could include issues such as rent arrears and dilapidations.

If landlord and tenant are on good terms and that tenancy is to the mutual benefit of both parties then it is always a good idea to act sooner, rather than later, to extend the term of the lease. This is also the opportunity for either party to try and negotiate a better deal.

Inevitably, there can be a knock-on effect of trying to negotiate a longer or improved deal (i.e. it may have to be registered, the question of “Security of Tenure” may arise, there may be tax consequences etc) and so it is always best to seek legal advice before proceeding.

All leases will be for a fixed term, but that is not to say both parties walk away (and the tenant vacates) on the expiry of the term. There are two types of leases; those where “security of tenure” has been excluded and the tenant must vacate on the expiry of the term, and those where it has not been, and the tenant has the automatic right to remain in the property and to request a new lease from the landlord.

Where the tenant has the right to remain, within six to twelve months before the end of the term the landlord will need to serve a Section 25 notice on the tenant, indicating whether or not they will object to renewal of the lease. There are only limited grounds for the landlord to object to renewal of the lease (and these are unlikely to be of assistance in the vast majority of situations).

The tenant may also within the six to twelve months before the end of the term serve a Section 26 notice on the landlord, requesting a new tenancy upon the expiry of the old one and set out proposals for the terms of the new lease.

Even where security of tenure has been excluded and usually the tenant would be required to vacate on the expiry of the term, the Landlord may ultimately decide that they wish to continue with the current tenant and therefore offer a new lease.

Whatever the situation; landlord or tenant, excluded or not, it is always best to seek legal advice at the earliest opportunity and our specialist teams will be able to assist.

When buying or selling a freehold Commercial Property, inevitably you will want peace of mind that the transaction proceeds as quickly as possible; with any issues ironed out at an early stage and there being no unexpected costs.

Acting for you as a purchaser, we will be able to investigate the title to the property and report to you in plain English on what you will need to consider. We will check that you can use the property for your intended purpose and warn you of any potential problems the title reveals. We will ensure that any issues are resolved before completion, and post-completion we will submit any Land Registry application that is required and make an SDLT return on your behalf (if applicable).

When acting for you as a seller, we will draft the legal documentation required to enact the transaction on your behalf and negotiate with the purchasers in relation to the same. We will answer any of their enquiries on your behalf and manage the running of the transaction to ensure a swift completion.

When looking to purchase land with a view to development (i.e. to build houses, factories or business units), there are a number of factors you will need to consider and it is best to seek legal advice before committing to any transaction.

Our commercial property specialists can assist with:
• Ensuring the land is suitable for development.
• Checking if planning permission is available or likely to be granted for the land in question.
• Identifying any required right of way or right of access, and reporting where there is not one.
• Reporting on the suitability of roadways and availability to connect to a mains sewer.
• Reviewing title and identifying any issues relating to boundaries, covenants or any other discrepancies.

Any transaction involving land used for agricultural purposes presents a whole host of unique issues not found with other property types, such as agricultural tenancies, conservation areas, listed buildings, rights of way, and compulsory purchases.

At Wilson Browne, we have a wealth of expertise in this area and have maintained a longstanding relationship with the rural and agricultural sector by acting for major landowners and the farming community for many years.

Option & Promotion agreements

Option and promotion agreements are used by developers when acquiring a piece of land with the intention of developing on that land. Often, these agreements are done years in advance of any development taking place and set out that the developer must look to satisfy certain criteria, usually relating to the requirements for future development (i.e. to obtain planning or to implement an access way or services).

There is a very fine distinction between the two agreements, but often they can be part and parcel of the same thing. In return for satisfying the criteria in the agreements, the developer will:
• In an option agreement – acquire the right to purchase the land at a pre-determined price (usually by reference to a formula).
• In a promotion agreement – be entitled to a percentage of the future sale proceeds of the land.

A conditional contract is a binding contract for the sale or purchase of a property that becomes unconditional once a certain condition has been satisfied. At that point, the contract is binding and the seller must sell and the buyer must buy.

A common condition to put in place is that the buyer must obtain planning permission for a particular use. If the buyer obtains the required planning permission within the time limit set out in the contract, then the contract becomes unconditional and both parties are obliged to complete the transaction.