Commercial Property Lease
Our experienced team of solicitors at Watermans Legal can help you through the complex process of leasing a commercial property.
Commercial Property Leasing
In every aspect of the work we do, we put the client first and our knowledge of the local area is second to none.
We deal with multiple types of leases on a regular basis, including:
- Tattoo Parlours
- Industrial Units
We can advise on all aspects of commercial leasing including drafting a new Lease, dealing with an Assignation of Lease, Sub-Leasing, and Renunciation of Lease. We can act for landlords or tenants. When taking out a lease on a commercial property it is important to seek independent legal advice as leases can often be complex.
If you are taking on a Commercial Lease we can:
- Negotiate terms to suit your needs such as rental figure, the term of the lease, the potential of a break clause, rent review dates, etc. You may be bound by the terms of a lease for a number of years so it’s important to seek legal advice at the earliest opportunity. We can discuss what the key aims are for you and your business and have these reflected within the terms of the lease.
- Deal with the contract (known as missives). Missives are a series of letters which form a contract. The landlord will issue an Offer to Lease which will set out the key elements of the deal such as the premium, rent, term of the lease, etc. The offer may be subject to certain suspensive conditions such as obtaining a satisfactory survey. We can arrange to have a survey carried out on your behalf. Once the contract is concluded you will be accepting the condition of the property which is why we always recommend having a survey carried out as you may be liable for all repairs to the building (internal & external) once the lease begins.
- Send you a detailed report on the lease terms using everyday language. It is important that you fully understand your obligations under the lease and we can guide you through these terms.
- Check Title Deeds. This is important to ensure that the landlord is the owner of the property and therefore any contract and the subsequent lease is valid. The Title Deeds will also show the extent of the property you are leasing i.e will you have a right to use the basement and or cellar? Title deeds contain burdens that impose limitations on what an owner/leaseholder can do within the property. These should be checked thoroughly to ensure that you have the authority to carry out your business from the premises.
- Check the insurance position of the building. The landlord usually insures the building and recovers the premium from the tenant.
- Check if the building is registered for VAT. If so, then VAT will be payable on the rent.
- Check that the premises have the necessary use to allow you to run your business. For example, the relevant use to sell hot food to run a hotel.
- Complete due diligence to protect your position (this will include seeking various reports from the landlord such as an Asbestos Report, Energy Performance Certificate, Fire Safety information, Property Enquiry Certificate, etc).
- Complete your LBTT Return to Revenue Scotland (Land & Buildings Transaction Tax). Tax may be payable on the transaction depending on the premium, annual rent, and length of the lease. Even if no tax is payable an LBTT Return must be completed by the tenant.
- Advice on Rent Deposit Agreement. Most landlords expect a rent deposit upfront which is usually 3 months’ worth of rent. The landlord will hold the sum, generally, until the lease comes to an end.
- Advice on Personal Guarantee. A landlord may insist on a third party providing a Personal Guarantee over the lease. This will mean that if the tenant defaults, the landlord can make a claim against the guarantor for any sums due. If you elect to take the lease out in the name of a limited company then the landlord is more likely to insist upon a Personal Guarantee being put in place.
- Assist with a license. You may decide to sell alcohol from the premises and may need to apply for a premises licence and/or have a premises manager appointed. We can help to guide you in the right direction to ensure that you are operating lawfully from the premises.
- Register all documents in the Books of Council & Session. There will be an obligation on the tenant to ensure that the Lease, Rent Deposit Agreement and Personal Guarantee are registered and extracts are produced. This ensures that the original documents are preserved and allows each party to have an extract version.
Assignation of Lease
- If you are taking on an existing lease from a tenant, this is known as an Assignation of Lease. You will be bound by the original terms of the lease (unless otherwise agreed). All of the above narratives applies in this type of transaction and therefore it’s imperative that you understand what you are signing up for before signing any paperwork. You will need the landlord’s consent before any Assignation of Lease can go ahead. We will be able to prepare the Assignation of Lease document, deal with the tenant’s solicitor and the landlord’s solicitor to ensure that the process can be completed as efficiently as possible.
Renunciation of Lease (ending a Lease)
- If you wish to exit the lease then there are certain procedures you must follow. For example, there may be a break option within the lease which allows you to end the lease before the expiry date. The lease will state how this must be achieved. It is likely that you will be required to serve a notice to the landlord before a certain date to confirm your intention to exit the lease. We can draw up and serve the notice on your behalf. Failure to serve the notice correctly may result in the lease continuing beyond the break option date.
- A Renunciation of Lease is a formal document signed by both parties to confirm that the lease is at an end. From the tenant’s point of view, a renunciation is an extremely important document as it frees the tenant from any further obligations within the lease.
Call our Commercial Property Team today on 0131 467 5566 or get in touch with us via our online enquiry form below.