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propertylawyer
propertylawyer, Solicitor
Category: Property Law
Satisfied Customers: 232
Experience:  Property solicitor with expertise in commercial and residential property transactions.
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Commercial lease agreement issue I, the landlord, started

Customer Question

Commercial lease agreement issue
I, the landlord, started talking for over 3 months via email and phone and meeting face to face regarding a commercial unit rental of 20k per annum for 3 years.
Agreed to everything in principle (both sides stipulated conditions i.e. break clauses, structural changes etc) and potential tenant paid I (the landlord) a deposit of 12,000. This was to cover costs of clearing the place; few issues needed fixing and instructing the solicitor. Since deposit the potential tenant has been on the phone and email asking for the lease and its status.
Everything was fine. She was due to visit and go through some things and instead sent a lengthy email saying her partner and co-workers have decided it is not worth pursuing. This was totally out of the blue.
I called a meeting and she basically switched into something else, insulting the premises, myself and went on and on. I didn’t really know what to say so was pretty much silent apart from saying we’ve agreed everything and costs have been incurred on her (the potential tenant) instruction. She did not comment further and sent an email today asking for the deposit back.
Prior to deposit being received; I stated to her that the deposit is refundable only if the lease is not reasonably agreed, she acknowledged this.
None of the details in the lengthy email relate to any of the agreed terms or otherwise therefore I consider it to be unreasonably agreed.
To date I have incurred the following actual costs;
£1,200 labour charges
£1,000 solicitor fees
£1,000 staff costs
I also had to serve the current tenant notice and agree a settlement of £2,000 – I am trying to get this reversed however the damage is done.
I have had to tell the solicitor that the agreed £3,000 package cannot go ahead due to the potential tenant retracting. The inconvenience and look of lacking professionalism is just beyond anything, I feel so embarrassed and like she set this up.
I consider myself to be out of pocket 12k (that’s 1 years rent with current tenant) in addition to the above (excluding the settlement) brings it to a total of £15,200.
Questions:
Am I able to issue a claim for £3,500?
Do I have to refund the full amount?
Where do I stand and what should I do?
I want to avoid the county court due to legal fees; becomes a nightmare.
Submitted: 4 months ago.
Category: Property Law
Expert:  propertylawyer replied 4 months ago.

Hi zain

What was the actual agreement regarding the deposit?

Do you have anything in writing confirming that it was no -refundable?

What correspondence was there regarding the deposit sent by the solicitor?

Did the tenant appoint a solicitor?

Did you complete the lease?

What do labour charges and staff costs actually relate to?

Do you have further details of what the £3k package actually is?

Please can you give me further information and I will be able to assist you.

Customer: replied 4 months ago.
Hi there,
Please retract name for privacy reasons.Deposit was to be used as mentioned to instruct solicitor.Prior to deposit I emailed "deposit is refundable if there is fair reason for the lease to not go ahead"I agreed a fixed cost with the solicitor of 3k for lease and any legal issues. The solicitor doesn't have any of the deposit it was direct from potential tenant to me.The tenant during the lease stage chose not to appoint a solicitor.The lease was in draft stage and not signed.Had to hire help to move heavy machinery and equipment; thats where one part of the actual costs come from.
Expert:  propertylawyer replied 4 months ago.

Thanks.

What exactly have you spent out and on what? It is still not clear.

You mention 1000 on fees, presumably abortive costs, then 1200 labour (does this relate to the hired help?) and 1000 staff costs(does this relate to the hired help?).

There is also the 2000 paid to the outgoing tenant, why was this paid? Was it paid as a direct result of the potential new tenancy?

Your expenses are 5200 in total.

You cannot claim the full year's loss of rent. You are under a duty to mitigate loss. Potentially you can claim for a good period if you have take all reasonable steps to mitigate loss by finding a new tenant asnd resetting the property ASAP.

What constitutes a fair reason for the tenant to withdraw? This is what a court would consider if the tenant brings an action to recover the deposit.

It is always difficult to predict which way a case would go as each turns on its facts and circumstances. However based on what you have said your claim is limited to actual expenses incurred. I don't think you can claim loss of rent and your duty to mitigate loss would strictly limit it in any event. However if challenged the court would assess this mater on whether the tenant had a fair reason to withdraw and if it did then you would have to return the funds potentially with interest and pay costs.

Do you have any further questions or queries ?

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