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Committing yourself or your company to the terms of a Commercial Lease, whether it be your first or your 10th, can be a time of anxiety and worry. Our job, as your Commercial Property Solicitors, is to clearly explain the process, guide you through the negotiations and bring the transaction to a satisfactory conclusion. Our aim is to save you money both during the lifetime of your lease and at termination.
It is usually quite difficult to give an idea of timescales until we have had sight of the Title Deeds and the Draft Lease, it is when we receive this paperwork that we know what we are dealing with.
The first step on receipt of the paperwork is to review the Legal Title. It is at this stage, that we will learn whether the Lease to you is a first Lease of the land/suite/unit you are acquiring. If there is already a Lease in place you will be taking an ‘Underlease’ or ‘Sublease’. The below diagrams and fictional scenario should help explain this:
Matt wants to take a Lease from Landlord Dave of Unit A1. Dave owns the land outright and has units A1, A2 and A3 available.
Now suppose that Matt has acquired a 5-year Lease from Dave but 2 years after taking on the Lease he wants to grant a Lease of A1 to Alex. This Lease would be the ‘’Sublease’ or ‘Underlease’:
The Lease at stage 1, as identified above, may contain provisions that prohibit Matt, as tenant in the Lease, from subletting A1 without the prior consent of Dave. This is known as an ‘alienation’ clause and allows Dave to retain some control over what Matt does with A1. Usually, Dave cannot unreasonably withhold his consent.
If the Lease at stage 1 contains this provision, Matt will need to ensure that before he grants the Lease at stage 2 to Alex, he obtains Dave’s formal written consent, and this is given by way of a ‘Licence to ‘Underlet’.
Dave, as the ‘Head Landlord’ or ‘Superior Landlord’, will need to instruct his own solicitor in respect of the licence and it is at this point things can, but do not always, slow down as a third party is introduced into the transaction. Matt cannot grant the Lease to Alex without the Licence being in place as he would be in breach of the Lease at stage 1.
Whilst your solicitor will advise you on the licence to underlet together with the Lease, it is important to note that you, as undertenant (Alex), may be solely responsible for the Head Landlord’s solicitor’s costs or you may be required to contribute equally to the costs with your Landlord (Matt).
We do hope the above has helped clarify a very important part of a Commercial Lease transaction. Should you require any further clarification or advice in this regard, please do not hesitate to contact us.
If you are looking to buy or sell or lease a commercial property look no further than Emmersons Commercial Property Solicitors in Newcastle and Sunderland.
If you would like any further information about our Commercial Conveyancing Services or you would like a FREE Fixed Fee Conveyancing Quote, then please do not hesitate to contact us on:
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