Get it wrong and you can forfeit the ability to exercise the option, a very expensive mistake. So here are our notes and guidelines to help minimise those mistakes.

1 Read your lease. Then……..re-read your lease.                                                This is the arbiter if there is a dispute. So keep to the rules of the lease even if they seem not to follow common sense. It is easier for the other party to dispute your actions if you fail to meet the strict lease requirements.

2 Don’t leave it to the last minute. Plan your moves well in advance and in conjunction with your business plans and get your estates working for the business and not your business working around your lease(s).

3 Who are you issuing the notice to? The landlord, the tenant, the agent or A.N. Other? Again check the lease requirement. If you want to send it to the legal team as well then ok, but check and re-check what the agreement, contract or lease requires, as an absolute minimum.

4 Check and re-check what is to be done and when.

5 Keep a diary of events.

If you are unsure what is to be done, or even if you have a lease break option then contact the team at RPS Lt and let us manage your options for you.

 Also known as the ‘Purple Book’ it is a guide to best practice in commercial agency applicable to UK commercial agents from marketing (within the envelope of the 1991 Misdescriptions Act) through to money laundering. But it also offers a useful source of reference for clients and other stakeholders.

It refers only to direct property ownership for both occupation and investment, not to

forms of indirect investment.

It is particularly important that those practising in this field should be reminded

of the duties and responsibilities they owe to the clients of their services, as

many key financial decisions may have potentially serious implications.

The aim of this guidance is to ensure that clients can be assured they will receive

a standard quality service from all commercial agents, and to help to improve

standards in the sector by raising public and professional awareness. A further

objective is to encourage agents to aspire to the highest operating standards

through the training and on-going development of their staff.

Both agents and clients should make themselves aware of the key aspects of the guidance that includes chapters on;

Ethics; Duty of care, conflicts of interest, the Bribery Act 2010

Securing instructions; Information to be provided under the Estate Agency Act 1979, when clients must pay.

Disposal / marketing of property; Explanation of auctions & tenders, the Property Misdescriptions Act 1991

Acting for Seller; Information the agent is bound to supply.

Letting a property; Glossary of terms & key terms

Acquisitions; Guidance for agents searching on behalf of clients.

Ending the Instruction; Helping to tie up loose ends

Safety & Security; Data Protection Act

Agency Management; Promoting good practice.

This further supports the advice from RPS Ltd that by appointing RICS chartered Surveyors to act on your behalf is the best way in ensuring that your position is protected by a body that sets guidelines and standards that protect and enhance the  commercial property agency industry.

By using the phrase ‘Without Prejudice’ at the top of all such communication will prevent the use of communications in evidence until a contract is in place to settle the dispute. The documents / communication will be privileged from being produced if legal proceedings are required. But once agreed terms are in place they will be bound, even if headed ‘without prejudice’ unless also headed ‘subject to contract’ (or it is clear that some other type of formalities is also required.

The courts have held, however, that the principle of “Privilege” can protect subsequent and even previous letters in the same chain of correspondence. Strictly speaking, therefore, it is not necessary that every letter be marked “Without Prejudice” if it is clear that the communication is intended to be part of the settlement negotiations. But to be sure it is recommended that you add such headings.

 “Without Prejudice” correspondence remains “Privileged” even after a compromise has been reached and is generally inadmissible in any subsequent litigation on the same subject matter whether between the same or different parties. However, where the negotiations are successful and the “Without Prejudice” correspondence constitutes a binding contract the correspondence may be produced to prove that such a contract has been entered into (if, say, one party does not comply with the terms of the settlement, and the other wishes to enforce it).

Note; Consider using ‘Without Prejudice’ on all communications, this includes emails and text message as well as formal letters and documents.

Following on from our previous blogs its time to see how your lease works in detail. What if you need to make a change?

It is quite normal that during the course of a lease a tenant may need to approach the landlord for consent for covenants that requires the landlords consent to proceed.  As we have pointed out in previous blogs as each lease differs it is essential to read the lease at an early point to avoid costly mistakes.

The distinction between ‘absolute’ covenants, those that prohibit the act, and ‘qualified’ covenants, those that require the landlord’s consent for that act, need to be understood and they contain certain requirements of both the landlord and the tenant. So be aware of the type of covenant and what you need to do. Here are some pointers;

Tenants request for a change of use;

Absolute Covenant – if the lease clause simply prohibits a change of use then there is no implied term to the effect that consent should be granted by the landlord. You cannot proceed.

Qualified Covenant – this may state that the change of use is permissible subject to obtaining the landlord’s consent.  This may go on to say that the landlord’s consent should not be unreasonably withheld or delayed.
What is reasonableness? Well, there is case law on the question of reasonableness, under the Landlord and Tenant Act 1927 s.19 if the landlord grants consent he cannot charge more than expenses and compensation for loss in value provided that the change of use does not include structural alterations to the property.

Tenants request for alterations;

Absolute Covenant – again there are no implied terms.
Qualified Covenant – if the lease clause states that such change is subject to the landlord’s consent it is also implied that the consent cannot be unreasonably withheld or delayed.  The landlord may require payment for compensation for loss in value of the property and expenses and he may also look for re-instatement provided it is reasonable and the improvement did not add value to the property.  Again there is case law which defines what an improvement is and we recommend you take advice. Again, there is case law on the test of reasonableness.

Requests for Assignment & sub-letting;

Absolute Covenant – again, statute does not imply any requirement or the landlord to give consent when there is a prohibition to assign or sublet.
Qualified Covenant – where the lease clause states that assignment or subletting is permissible with the landlord’s consent, statutes assists;

Landlord and Tenant Act 1927 s.19 – there is a proviso that consent cannot be unreasonably withheld and it permits the landlord to recover his reasonable expenses.
Landlord and Tenant Act 1988 s.1 – this provides that landlords are liable for unreasonably withholding and/or delaying consent.  The landlord must provide written reasons for refusing consent or conditions.
Landlord and Tenant (Covenants) Act 1995 – modern leases now specify circumstances when it will be reasonable for a landlord to refuse consent.  Consider this when negotiating and drafting a lease.

Landlord’s advice;

If you are granting a new lease or renewing an old, think carefully about the circumstances in which you would refuse consent to an assignment or subletting. You should also be aware that the more restrictive a lease is the bigger impact it will have on its valuation.

If you receive a tenant’s application then you should act promptly;

Check the lease

Obtain valuation and/or accounting advice.

If you need more time then keep the tenant informed.  If you want more information ask for what you reasonably need and why you need it.

If you want to refuse consent, spend time drafting your response as you only have that one opportunity to explain your reasons.  Provide the supporting advice from your professional team’

Tenant’s advice;

Again, and as always, read the lease for the conditions that need to be performed in relation to your application and meet them.

Check that you are not in breach of any lease covenants. 

Put your request for consent in writing and make it clear what you are asking for. Set a reasonable date for your landlord’s decision and quote the statues above. This shows you know your position and your rights.  Send it by post and recorded delivery.

Pre-empt the landlord’s request for information by providing everything with your application.

If you believe the landlord is stalling, tell him so in writing but carry on dealing with his enquires.