Commercial Property

Landlords should ensure any outstanding issues with tenants are resolved before they exchange contracts on the sale of a property.

Mark Sarnowski

Mark Sarnowski, a property specialist with Charles Lucas & Marshall, says tenants in dispute with the landlord, can jeopardise the sale by registering a notice against the title of the property.

In a recent case where he was acting for the landlord, the tenant had been in dispute with his client who was withholding the tenant’s deposit because of damage to the property and subsequent repairs which needed carrying out.

The property was put on the market and a sale agreed but days before contracts were due to be exchanged, the tenant registered a notice against the property with the Land Registry.

“Once that happens, a process begins automatically, even if there is no legal justification and the notice is a spurious one,” says Mark Sarnowski. “Obviously these notices can be challenged but that takes time – and that can be critical when you are selling a property.”

Mark Sarnowski advised his client to take a firm line with the tenant and warn him that if the sale of the property was delayed or fell through, the tenant would be liable for all the losses incurred to date.

“In the end an agreement was reached,” he added. “My advice though would be for landlord and tenant to resolve any outstanding issues before getting close to the exchange of contracts.

“There are procedures tenants can use against landlords which gives them a strong hand, irrespective of whether they are legitimate or not.”

For further information contact Mark Sarnowski on 01488 682506 or mark.sarnowski@clmlaw.co.uk

Q. I want to move from my premises and have found someone who wants to take the lease – but the landlord is being very difficult and I might lose this person.  Is there anything I can do?

Hugh Ellins, commercial property lawyer, Charles Lucas & Marshall

A landlord now has a statutory obligation to act reasonably and without delay.  If he does not then he is liable to a claim in damages.

As ever, life is a little more complex than the short answer would imply. The landlord is entitled to satisfy himself the new tenant (assignee) will be able to pay the rent and meet other obligations in the lease. The landlord is therefore able to raise enquiries and until he has satisfactory answers, can refuse consent.  Additionally, your lease may contain conditions relating to the assignee which have to be met. Until those conditions are met, the landlord can refuse.

You should first check, or get the lease checked by a solicitor, to see what it says about transferring the lease to an assignee. Assuming all the conditions are fulfilled or capable of fulfilment then remind the landlord of his statutory obligations and that he is at risk to a claim for damages.

If that does not work you are left with making an application to the court or just going ahead with the transaction. This is a high risk strategy and only to be adopted in extreme cases.

For further information contact Hugh Ellins on 01793 511055 or hugh.ellins@clmlaw.co.uk