Leasing of Shops & Other Licensed Premises

You might be tempted into thinking that most leases of commercial property are the same and that you can save yourself a few pounds by just signing up to a lease and avoid having to pay any legal expenses. Unfortunately that could be a very costly mistake indeed.

The law on leases in Scotland is complicated. The simplest of words can have the most unforeseen and expensive consequences.

Let us look at some of the more common pitfalls and problems where good legal advice is essential:-

Repairing Obligations

Heads of terms will often refer to an FRI lease which means a full repairing and insurance lease. The tenant is responsible for all maintenance, both internal and external. The landlord insures the property and the tenant is obliged to repay the insurance premiums to the landlord on demand. The following is a common wording:-

“The Tenants accept the Premises and the Common Parts as being in good and tenantable condition notwithstanding all (if any) defects therein whether latent, inherent or otherwise, and are held to have satisfied themselves in all respects that the Premises and the Common Parts are fit for their purposes and bind themselves from time to time and at all times during the currency of this Lease well and substantially to repair, maintain, decorate, cleanse, glaze, point, and when necessary to reinstate, renew, replace and rebuild the Premises.”

Regardless of the condition of the property, the Tenant accepts that the property is in excellent condition and will keep it that way. This this includes hidden defects (such as the presence of asbestos) that might not be obvious to the naked eye.

If the building is not in the best of condition, then the tenant has just signed up to put it in that condition even if the problems arose prior to the start of the lease.

A solicitor will always attempt to amend this clause and will advise that the premises are surveyed on your behalf to identify any potential problems. The condition of the property or the building of which it is part may be such that it is necessary to record that at the start of the lease by insisting that a schedule of condition (often photographic) is attached to the lease and the tenant is not obliged to maintain the property beyond its current condition.

Break Options

These give the right to the tenant, landlord or both to terminate a lease early, provided certain conditions are met eg the rent has been paid to date and there are outstanding breaches of the terms and conditions of the lease. The courts interpret these very strictly and often what looks like a good option is worthless. They need close attention to make sure they will operate correctly.

Notices

This is another area where both landlords and tenants fall foul of a strict interpretation by the courts of the relevant clauses. Notice is required for many things, eg to exercise a break option, or to review rent. Failure to serve notice in the precise way specified in the lease can often result in the loss of the right altogether.

Not instructing a solicitor when entering in to a lease might just be the most expensive mistake you will ever make.

Contact Our Expert Property Solicitors Rutherglen & Glasgow

Both Martin Berman and Robert Westwood have extensive experience in dealing with these issues and would be happy to discuss this with you. Please call today on 0141 647 9851 or fill out an online enquiry form.