Commercial Lease help from Future Law Solicitors

Commercial leases and licences


Whilst most people will have had experience with residential renting, when it comes to commercial leases and licences it is a completely different ball game. The law tends to lean towards protecting the residential tenant and a residential lease is usually much more straightforward, but a commercial lease or licence will need considerably more attention. If you want to make sure that you fully understand the contents of any commercial leases and commercial licences that you intend to commit to then it can be a good idea to ensure the documentation is looked over by a legal advisor in advance – otherwise you could end up paying for it for years to come.

There are considerably more pitfalls when it comes to entering into commercial leases than licences. Here are a few of the most common.

1. Length

Remember that business years are like dog years – signing a lease for three regular years might well feel like ten or twelve business years if you want to move on! The point here is that you should be cautious about signing up for a very long commercial lease – three to five years is fine, but a term of ten to twenty years should be negotiated down. If you want to have the flexibility of getting out of the contract early then you will also need to check that the lease has a break clause, or you will need to negotiate one in.

2. Costs

When you first begin negotiating a commercial lease, be sure to check out what kinds of costs are involved. Clearly you will have to pay rent on the property, but is there also a service charge and will your company be required to pay VAT? If you don’t know the answer to these questions, it is often worth consulting a professional as tracking down the answers can be a complex business and a lack of experience can set you up for a fall.

3. Use

One of the key elements to look out for in a lease is to make sure that it allows you to actually use the premises for the purposes that you need it for. This might seem like a rather obvious point but it is up to you to check that the lease allows you to do what you need to do, not the landlord. Signing the lease and then not being able use the property is an extremely frustrating situation to be in and is the kind of error you will kick yourself for afterwards.

4. Repair

What happens if the premises need repair during the time you are occupying them? Some commercial leases will place the onus entirely on the tenant to carry out repairs and maintain upkeep. Although the British Property Federation’s Commercial Lease Code recommends that the requirement to carry out repairs is commensurate with factors like the age of the premises and the length of the lease, many landlords simply ignore this so you may need a legal representative on your side to ensure you are not unfairly burdened.

With respect to licences, the main pitfall is undoubtedly ensuring that you have the correct licences in place and managing the process of applying. Operating without the right licence can be absolutely disastrous for a business but is something that can easily be overlooked or misunderstood by someone who doesn’t have the right experience or understanding of the sector in which they are operating.

At the heart of all these issues lies either a lack of experience or a lack of knowledge about the legal requirements or implications of commercial leases and licences. The easiest and most cost effective way to overcome this is to simply take fixed cost legal advice before signing anything as this can save a lot of heartache in the future.

Author Susan Edwards
Http://www.future-law.co.uk