Leonard Kasler & Company
Commercial Leases
(20 Things for a Landlord to Know)
1. Do your Properties have entry systems, air conditioning, lifts, fire alarms or security systems? Have you checked that any such equipment is Year 2000 compliant? On the 1st January 2000, Tenants may be reaching for their Leases and Lawyers
2. Never agree a variation of the Lease without checking the implications for the original Tenant, intermediate assignees and guarantors
3. The Landlord & Tenant (Covenants) Act 1995 may have allowed some parties "off the hook"
4. It may be invalid to require the Guarantor of an assigning Tenant to enter into any Authorised Guarantee Agreement
5. There is no obligation on you to "shop around" for insurance premiums
6. A variable service charge tends to imply a term that the costs of providing those services will be fair and reasonable
7. There is no test for a sub-letting that the Sub-Tenant must have post tax profits of least three times the Rent
8. If you do not like a Tenant's proposed Assignee or Underlessee, give comprehensive reasons in writing as soon as possible. Conversations and "afterthoughts" will not help you
9. Do not return money to the Tenant just because the Tenant overpaid by mistake. Payments made under a mistake of law are not returnable
10. Do not levy distress for unpaid service charge, unless you are sure that it is totally recoverable under the terms of the Lease.
11. Illegal or irregular distress will entitle the Tenant to damages and also a penalty of double the goods sold
12. Avoid service charges by reference to rateable proportions. Cater for the possibility of back-dated appeals
13. If the Property is in disrepair, consider whether to enter, inspect, carry out works and recover costs rather than suing them for disrepair.
14. You might not be able to resist an application by your Tenant to sub-let at a rent less than the passing rent, if the Tenant has structured his sub-lease and a side-letter correctly
15. Service by recorded delivery happens at the date of posting. Service by ordinary post does not take place until it is received. Arguments can ensue as to receipt
16. Add a "last day" rent review clause into your Leases
17. Ensure your records show the full history of occupation. Make sure that notice of any arrears is sent to everyone who might be liable. Do not let former Tenants and guarantors "off the hook"
18. You cannot force a Tenant to keep his shop open but try to maximise the damages payable and protect your other tenants from the inevitable effects of vacant premises nearby
19. If you have reserved the payments into the sinking fund as rent, this and the interest is your money for tax purposes
20. Double check your service charge calculations. If you demand too little, you might not be able to correct your mistake
Michael Breeze
Leoanrd Kasler & Company
Sunday, 13. October 2002