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Archive for the ‘Leases’ tag

Energy Efficiency Hotting Up

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Malcolm Poynter

Malcolm Poynter – Partner

Most properties are now required to have an Energy Performance Certificate. In relation to commercial buildings it will be unlawful as from the 1st April 2018 to let a property which has an energy performance rating lower than E. This may seem a long way off but landlords should be bearing this in mind when they acquire properties or own properties below this standard which they may wish to let in the future.   This will also apply if the landlord then wishes to renew the lease to an existing tenant or indeed extend the term.

For further details please contact Malcolm Poynter on 01635 521212 or malcolm.poynter@clmlaw.co.uk

Written by Malcolm Poynter

October 15th, 2015 at 4:01 pm

What a bind!

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When a deal is done in relation to property there will be a contract. What distinguishes property transactions from simple contracts is the ability of one party to bind future owners of the property. Malcolm Poynter, a commercial property specialist with law firm, Charles Lucas & Marshall discusses an example of this, restrictive covenants.

Malcolm Poynter

Malcolm Poynter – Partner

Properly drafted, a covenant on a property will bind each owner of that property. There are many examples of restrictive covenants, such as not to sell alcohol, not keep pigs and not to use the property for business.

The covenant must be restrictive ie say what you cannot do. If it is positive, such as to contribute to the maintenance of something or to keep something in repair, it is not directly enforceable against successors of the freehold. It is for this reason that flats tend to be dealt with by lease because each tenant is bound by the terms of the original lease in which the covenants will be set out.

Covenants that restrict building can obviously cause problems if you are proposing to develop your land. The wording of these covenants needs to be looked at very closely to decide what may not be done. For example, there was a case where a developer wanted to build a roadway which had to be adopted by the Highway Authority as a public road. A covenant not to erect anything on the land did not prevent the roadway being built but did prevent lamp posts being erected which meant the road could not be adopted and was therefore, in effect, prevented.

Some covenants allow building if ‘the Transferor’ approves the plans. Does this mean the original Transferor or the current owner of the land which has the benefit of the covenant? Difficulties can also arise if the person to give consent cannot be found or has died.

When faced with covenants restricting development sometimes you can establish that the covenants are invalid and may therefore be ignored.

Sometimes there are grounds for applying for the covenant to be modified or discharged by the Upper Tribunal (Lands Chamber). There are a variety of grounds upon which an application may be made.

Compensation may be payable but how is it calculated? The loss of the covenant may have a small effect on the value of the property with the benefit but, on the other hand, the person with the benefit may have been able to extract a significant payment from the developer for the covenant’s release. There is no rigid formula how compensation is to be calculated and, as the Courts love to say, each case depends on its own facts.

Further details please contact Malcolm Poynter on 01635 521212 or malcolm.poynter@clmlaw.co.uk

Written by Malcolm Poynter

April 10th, 2015 at 10:38 am

Commercial Leases – The Devil is in the Detail

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With business confidence growing in West Berkshire, Malcolm Poynter, a commercial property specialist with law firm, Charles Lucas & Marshall, is witnessing a noticeable increase in instructions on new leases. These are ranging from start-ups taking their first premises through to establishing businesses relocating and expanding.

Malcolm Poynter

Malcolm Poynter – Managing Partner

The tenant, under a commercial lease, usually takes on obligations which are not always that obvious to people not used to dealing with commercial leases on a regular basis.

Tenants often negotiate terms with the landlord’s agents but are not themselves represented. Since the landlord agent acts for the landlord, he obviously tries to get the best deal he can for his client. Tenants can often get a better deal if they are themselves represented by an experienced commercial agent. The agent can advise you on the amount of rent you should be paying. He can advise on the market and your negotiating strength. The solicitor will advise you on the terms of the lease and what they actually mean.

During the course of negotiations Heads of Terms will be agreed. These tend to be non-binding but are the basis upon which the landlord’s solicitor will draft the necessary documentation.

The tenant should be in contact with his solicitor to discuss the main terms as matters progress so that there are no unpleasant surprises when the draft documentation arrives. Without this, tenants often find that they had not fully appreciated what they had agreed until we explain the provisions of the resulting draft lease to them.

Once Heads of Terms have been agreed and issued it is far more difficult to reduce the impact of the more onerous provisos when negotiating the draft lease.

Understanding risks and potential obligations is crucial to planning your business and commercial leases can often include significant risks and obligations for the tenant. For example, it is often thought that solicitors’ advice is less important for short term leases at a low rent. However, this may not be the case. If your annual rental is a few thousand pounds but you then, unexpectedly, discover you are responsible for the cost of repairing the roof the actual cost of your occupation has increased significantly.

If you are to pay a service charge, then what can the landlord charge back to you? Often he can charge you the full amount expended in repairing the structure of the building and, in some cases, even the cost of improvements.

You may well be able to remove or limit your liability but ensuring you understand the Heads of Terms agreed could be crucial.

If you understand your potential liabilities you can plan accordingly. You may see a property you think is ideal for your business, but do the sums stack up? Does it come with unacceptable risks? Professional advice can help you answer these questions.

Further details please contact Malcolm Poynter on 01635 521212 or malcolm.poynter@clmlaw.co.uk

Written by Malcolm Poynter

April 25th, 2014 at 5:27 pm

Landlords – Resolve Tenants’ Issues Before Sale

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

Mark Sarnowski

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

 

Written by Mark Sarnowski

November 27th, 2012 at 7:57 am