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Joshua
Joshua, Lawyer
Category: Property Law
Satisfied Customers: 26069
Experience:  LL.B (Hons), Higher Prof. Dip. Law & Practice
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Hi, i am negotiating a commercial lease at a premises in london

Resolved Question:

Hi, i am negotiating a commercial lease at a premises in london and we have agreed a 10 year deal with a break clause which is fine but the landlord due to past experiences does not want the lease inside the 1954 act which means that my tenancy is not secure on renewal in 10 years which means the new business that i start from there would be worthless as i will not be able to resell if i ever wanted to do so.

he has called me today however to advise that although he wants to keep it out of the act we could customise the lease to include terms that will allow me renewal and assignment after the 10 years to a suitable applicant.

what wording would you advise i should have in there to protect my position?
Submitted: 3 years ago.
Category: Property Law
Expert:  Joshua replied 3 years ago.

Joshua :

Hello and thank you for your question. I will be very pleased to assist you. I'm a practicing lawyer in England with over 10 years experience.

Joshua :

May I ask if the landlord has given any particular reason for wishing to exclude part II protection please given his apparent readiness to give you a some form of limited right to renew?

Customer: His previous tenant was a bit crazy and very aggressive and intimidating and they couldn't get rid of him because he was inside the act.
Joshua :

Thanks.

Customer: So now they are being extra cautious and don't want to be stuck with a tenant if such a thing were to happen again.
Joshua :

There is a potentially very simple approach you could propose which would be that you simply negotiate a longer lease - say 15 or 20 years in length with further one way break clauses in your favour.

Joshua :

This would give you the certainty of a longer lease with the reassurance that you can get out of it at set intervals if you wished to do so.

Customer: but that still gives him the power to not renew my lease or to activate the break clause if it's aXXXXX/span>
<span class="JA_chatAuthorName"Customer: its a difficult one to be honest because I can't see how he can give me the same rights and then contradict it by putting the lease outside the act
Joshua :

The alternative would require some very complex and in my view wholly pointless drafting because what your landlord seems to be proposing is excluding part II of the act on the one hand and with the other giving yyou a form of personal right (limited or not) to renew the lease.

Customer: i just need to know that I don't spend money and time and in 10 years time he says I won't renew it and can essentially take the business for himself
Joshua :

This does not appear to make much sense but if you decided to run with it would present a fearsome negotiating and drafting exercise as you would both essentially be engaged in a process whereby you effectively were re writing Part II of the Act as a personal right within your lease. This begs the question if he is going to give you effectively personal rights under the lease akin to part II of the Act why not just include part II in the first place?

Customer: That was what I was thinking also which is why I thought I would get some advice. Being outside the act but given the same rights makes no sense to me
Joshua :

To my mind there are three practical options: 1) insist on the inclusion part II protection; 2) provide for a length of lease you are comfortable with along with break clauses or 3 include an option in the lease that you may renew the lease on substantially similar terms to the Lease on or before the expiry of the Lease and provide that such right is assignable to third parties.

Customer: But how does that stop him from saying I won't renew it bugger off somewhere else. I don't think he will do that but you can't trust anyone in business
Joshua :

However regarding 3) this is akin to and arguably provides even greater protection than part II so whether the landlord would be willing to agree to such a provision would be questionable - in deed surprising.

Joshua :

Re your last post - I have proposed three options - to which do you refer please?

Customer: PArt 3
Customer: The act protects me from being kicked out after the expiry of the lease whereas the 3 proposals you have given do not protect that positiob
Joshua :

Thanks. If you were to be able to include an assignable personal option to renew the lease then this is a personal (assignable) right you could personally exercise in lieu of part II protection providing your solicitor is satisfied with the drafting. It potentially would give even greater protection than part II as part part II can be resisted in certain circumstances (e.g. if the landlord wishes to redevelop) so I cannot see why the landlord would wish to agree to this but it would serve to give you the protection you seek.

Customer: Ok thank you this might work. Appreciate your guidance
Joshua :

Some landlords will not agree to part II protected leases - more common these days than in the past. This is not suitable for all tenants and ultimately if you cannot agree terms that you are satisfied with you need to consider whether to walk away. To my mind part II protection is more striaghtforward for both of you rather than some form of customised personal option to renew the lease (as per 3 above) but if you are both willing to incur some additional potential legal costs renewal option could be considered instead.

Joshua :

Are you happy with the information I have provided to you above or is there anything above I can clarify for you any further?

Customer: Yes thank you
Joshua :

Thanks

Joshua :

If I can assist any further as the situation develops please do no hesitate to let me know.

Joshua :

If you have no further questions for now I should be very grateful if you would kindly take a moment to rate my service to you today. Your feedback is important to me. If there is anything else I can help with though please reply back to me though.

Customer: I think you have answered the questions. I will give him the renewal options and if he agrees then great and if he doesn't I walk away
Joshua :

Good luck with your ongoing negotiations

Joshua and 2 other Property Law Specialists are ready to help you