As a business tenant, your main focus is on running your business effectively from your premises, rather than becoming involved in lengthy and costly disputes with your landlord. Cripps LLP explains how you can effectively manage this relationship.
It may seem obvious, but it’s important that you fully understand the terms of your lease before signing up, to avoid any surprises later on. This is the time to negotiate on any terms that cause you concern. Employing a tenacious lawyer at this stage can help prevent future disputes.
Once both landlord and tenant have signed up to the lease they are bound by its terms. If there are no express terms then common law will imply some terms into the lease, requiring you as tenant to pay rent, pay rates and taxes, not to alter the premises, and to use the premises in a “tenant-like” manner.
The best way to avoid a dispute with your landlord is to abide by these express and implied terms. However, you should also be aware of the types of dispute that can occur:
Falling into arrears
A wise tenant talks to their landlord before falling into arrears. It may be possible to negotiate an agreement, and your landlord may appreciate it if you try to do so before any rent is late. Your landlord’s potential remedies for failure to pay rent include being able to seize your goods as soon as any rent is due and unpaid, or starting legal proceedings in order to recover the rent, or forfeiting (ie terminating) the lease by entering the premises and changing the locks. Your lease should explain when the landlord may forfeit the lease, and as a tenant you can apply to the court for relief (which reinstates the lease), but you must act quickly and be ready to pay your debts, interest charges and your landlord’s costs. Knowing what your landlord can do should inform your strategy to avoid a dispute over rent.
Rent review clauses
These appear in commercial leases to counter the effect of inflation and provide for the rent to be reviewed at fixed intervals during the term of the lease, although the precise wording will vary. “Upward only” rent review clauses are common, leaving tenants having to pay at least the current rent whatever might be happening in the market. If the review is carried out late, often the rent payable can be backdated. You can obtain valuation advice ahead of the review, so you can prepare for the likely outcome. Many rent review clauses state how disputes should be resolved between landlord and tenant, but getting good valuation advice early on may avoid the need for this.
Your landlord, having inspected the premises, may serve a schedule either requiring you to carry out repair works or seeking compensation for the disrepair they say must be rectified. You need to fully understand the extent of your obligations to keep the premises in repair and do your very best to comply with these, from the start of the lease until its end. You not only need to remedy any defects as and when they arise but should also instruct a surveyor to inspect the premises and prepare their own schedule well before the lease ends. You can then make any repairs required by the terms of the lease, ensuring that these are recorded. Recording the state of the premises once it has been cleared at the end of the lease creates a paper trail as to the condition of the premises, hopefully avoiding the need for argument.
Sometimes disputes can’t be avoided, but obtaining professional advice to tackle any problems as they arise and before the parties’ positions become entrenched can minimise the impact.