Reassignment of a Commercial Lease & Licence to Assign

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    Reassignment of a Commercial Lease & Licence to Assign

    Hello,

    Thank you in advance for any advice. My position is I am starting a new business and will be beginning my first commercial lease. I will keep this post as brief as possible and just include what is needed, please ask if there's anything additional that would be helpful. I would like an understanding of the likely legal costs that will be involved and common pitfalls I should be aware of.

    I am quite unaware of the legal structure for assignment of commercial leases and wish the situation could be simpler than it is. I have however been told by the landlord's agent this is the only way I will be able to proceed. The property is a three-story high street unit.

    The lease I am taking on is current leased to an estate agents, through a licence to assign. Therefore there are three parties, the landlord, the assigner, and the assignee. I will be becoming the assignee. I have asked the landlord if it is not possible for me to lease the building directly from the landlord but have been told this will not be possible. The current assignee and assignor are in similar businesses and know each other, I only know the assignee because I have met them to discuss taking the premises over from them. They are 3.5 years into the 5 year lease and I imagine they are terminating their lease due to business troubles meaning they cannot afford/validate paying the lease.

    My first two questions are: When the lease expires in 1.5 years will I have all the same rights to renew the lease under the 1952 Act that I would otherwise if I were a tenant directly with the landlord? I have a letter from the landlord's agent stating they will allow me to renew the lease in 1.5 years time and have no intentions to remove me. The letter also states that my proposals, to redevelop the site from A2 to A3 & A5 will be allowed by the landlord - is this legally binding or do I need a letter signed directly by the landlord? I have been informed such a letter is not easily obtained as there are three different landlords who all live throughout the UK and are in their 90s. That brings me onto another question, with all due respect, the landlords are likely to pass away given their age during my tenure, is this something that could affect me i.e. when the property is inherited or otherwise exchanges hands may the new landlord force any actions against me? Such as eviction for whatever reason or changes to the lease?

    I have been told it will not be possible to negotiate amendments to the lease. Reading the lease myself all appears standard, I will of course have a solicitor read the lease to ensure I am taking on a reasonable contract. Given they are not amending the lease and only explaining it to me - what should I expect the cost of this to be? What will the other solicitor's costs involved likely be? Such as (I presume I will need) a new license to assign and a new deed of assignment. The property is located in Lancaster, Lancashire if that affects the likely cost (I read in other forums that city of London solicitors cost a premium for example).

    Onto a different matter, the property has suffered leaks this week, appearing to be coming in under the roof. These leaks have stained walls, roof tiles and carpets throughout the property. There is a schedule of condition for the property and much of this says the property is fair or good. The current tenant has assured me all walls that are now stained will be repainted, carpets cleaned etc. which will restore the internals to the condition they are in the schedule. I suppose this is reasonable and I cannot ask anymore? I have also been told the leak will be repaired. They will be in the property until August at least so I will be able to check before signing the lease that any damage has been made good and the repairs to stop future leaks under taken.

    Going forwards, I believe I need to involve a solicitor, I have one in mind who happens to be a commercial leases solicitor who I met in a social setting, however I have never used the services of a solicitor before. Am I correct in understanding I should first get their advice on the contents of the lease, i.e. if there is anything in there that means it is a bad proposition to take on? I will then need to instruct the solicitor to contact the landlord's solicitor and the assignor's solicitors to negotiate a new licence and deed to assign. Is there anything else from a legal position I need to undertake?

    I believe there is little point in conducting a new schedule of condition as I have been told the existing schedule of condition with the lease is the one that will be referred to when the lease expires. Perhaps however I would be prudent to have a surveyor check out the building which would only serve the purpose of highlighting to me any issues with the building not in the current schedule which I would then become liable for. What is a reasonable cost for a surveyor?

    Many thanks,
    Chris


    #2
    "When the lease expires in 1.5 years will I have all the same rights to renew the lease under the 1952 Act that I would otherwise if I were a tenant directly with the landlord?"

    Presupposing the existing lease is inside LTA54, yes.

    "I have a letter from the landlord's agent stating they will allow me to renew the lease in 1.5 years time and have no intentions to remove me."

    I don't think the letter would be binding. a landlord is not obliged to communicate its intention in advance of statutory notice. The intention can only be at the date of the letter; circumstances might change. Also, you say the landlord is elderly so a successor landlord might have different intention. However, as i have said in answer to the first question, you would have renewal rights presupposing the tenancy is a qualifying tenancy within the meaning of Landlord and Tenant Act 1954.

    "The letter also states that my proposals, to redevelop the site from A2 to A3 & A5 will be allowed by the landlord - is this legally binding or do I need a letter signed directly by the landlord?"

    The letter is not legally binding because until the assignment is completed you are not the tenant. Under the lease, a licence to assign will have to be granted by the landlord which should also contain the landlord's consent to change the use. (Or a separate deed to vary the user in the lease.) Also, it is likely you will need planning permission for change of use.

    "the landlords are likely to pass away given their age during my tenure, is this something that could affect me…"

    What happens if and when the landlords pass away during your tenancy is that your tenancy is unaffected. Whether the beneficiaries or another landlord would have the same attitude as the current landlord is not something to assume. Any variaions to the existing lease would be by mutual agreement. whether a new landlord could 'evict' you depends upon whether you are in breach of covenant or if on expiry of the lease the landlord could oppose renewal on one or more of the grounds stipulated in LTA54 and oppose successfully.

    "I have been told it will not be possible to negotiate amendments to the lease." As an assignee, you would be taking over the existing lease. Whether it would be possible to negotiate amendments after the lease has been assigned to you (strictly, after the tenant's interst is vested in you) is a separate matter.

    :Reading the lease myself all appears standard"

    There is no standard form of business lease common to all commercial property. as you say, your solicitor should read it and explain anything you do not understand.

    "Given they are not amending the lease and only explaining it to me - what should I expect the cost of this to be? What will the other solicitor's costs involved likely be?"

    Your solicitor should advise you of the costs they would charge for what you would be instructing them to do. When the tenant applies to the landlord for consent to assign the lease to you, the landlord's solicitors or the landlord\'s agents will confirm the amount of costs required from the tenant and an Undertaking on Costs will be required before anything else happens. It is usual for an assignee to come to some arrangement with th tenant as to sharing the landlord's costs. the landlord's costs are normally payable whether or not the matter proceeds to completion.


    "The property has suffered leaks this week…"
    As assignee you step into the shoes so to speak of the outgoing tenant and become liable for the repair and decoration covenants in the lease regardless of the state the outgoing tenant left the premises in.

    "Am I correct in understanding I should first get their advice on the contents of the lease, i.e. if there is anything in there that means it is a bad proposition to take on?" Yes.

    "I will then need to instruct the solicitor to contact the landlord's solicitor and the assignor's solicitors to negotiate a new licence and deed to assign. " When yoi are ready to proceed, after having agreed things in principle with the existing tenant, the existing tenant would make the application to the landlord for the licence to assign. Different landlords and agents do things differently. i can only speak from my experience. When I deal with applications for licence to assign, usually what happens is that the tenant or tenant's solicitor has contacted my client direct. my client passes the request to me to deal with. the first thing I do is get an Undertaking on Costs for my fees, making it clear that if and when my client's solicitors become involved a further Undertaking on Costs would be required for the legal costs. Usually, I provide an estimate of what the legal costs are likely to be. I direct my questions to the tenant's solicitors in the first instance but say I have no objection to dealing with the prospective assignee's solicitors if preferred. After i have completed my enquiries and made my recommendation to the landlord, i communicate the decision to the tenant's solicitors. If consent is granted then I prepare and circulate heads of terns and the landlord's solicitors would be instructed. The pace thereafter depends upon the pace at which the tenant and assignee transact. Also, it depends upon what stage of the transaction the request for licence to assign is made.

    "Perhaps however I would be prudent to have a surveyor check out the building which would only serve the purpose of highlighting to me any issues with the building not in the current schedule which I would then become liable for. What is a reasonable cost for a surveyor?:
    Yes, prudent. Cost for a surveyor? Get some quotes and compare.

    Comment


      #3
      There are three rules for anyone taking a lease of commercial premises:

      RULE 1: Instruct a commercial landlord and tenant conveyancer
      RULE 2: Remember rule 1
      RULE 3: Do not forget rule 2

      Comment


        #4
        Hi Thank you for the replies they were extremely helpful and I apologise for only just replying, I had believe I already posted a reply with my thanks.

        I have receive quotes from three different solicitors so far and the prices quoted range enormously. The cheapest was 298 + VAT to handle the negotiations with the landlord and current tenant and to view the current lease and explain it to me, highlighting anything within it of particular significance, with the understanding it is not possible to make changes to the lease and therefore there will be no 'work' in terms of producing new documents or amendments to the lease. The second was effectively for the same services and was for £498 +VAT.

        The third quote from the solicitor I got the best impression from over the phone was (typically) the most expensive by some margin, quoting £950 to £1250 + VAT + up to £300 disbursements for any searches deemed necessary. Although they are the highest quote, they are actually closest to what I was expecting to have to pay. Any advice on the how reasonable these fees are would be greatly appreciated.

        I believe the two lowest quotes are low because they interpret the job as straightforward and limited to viewing the current lease and then advising me on it as necessary in addition to negotiating with the landlord and current tenant. Therefore when any additional work comes up, the price may increase accordingly.

        Whereas the most expensive quote I believe is for a service that will include everything that may become necessary in order to see the negotiations to completion.

        Contrary to advice received from rentreviewspecialist, the most expensive solicitor affirmed without doubt that the letter from the landlord's agent stating I will be allowed to renew my lease when it expires in just over a year is legally binding. This is potentially a very important point so any further advice on this would be greatly appreciated. In a worse case scenario, fitting out the unit could reduce the amount of time I actually trade from the unit to 12 months or less until the lease expires. Of course, to then be kicked out would be catastrophic in terms of disruption and cost of relocation.

        Will I need a new licence to assign? And if so what would be the cost?

        I have been advised the landlord's costs would usually be footed by the current tenant. Thus far no one has taken responsibility for them, which my solicitor advised she will negotiate on my behalf. This seems like a good deal to me and indeed as rentreviewspecalist stated, sharing would seem a reasonable alternative if the tenant does not agree to pay them in full. What should I approximately expect the landlords reasonable costs to be? I have been advised that in addition to the landlord's costs, the landlord's agent fees will be £250 to negotiate with all parties.

        Comment


          #5
          "Contrary to advice received from rentreviewspecialist the most expensive solicitor affirmed without doubt that the letter from the landlord's agent stating I will be allowed to renew my lease when it expires in just over a year is legally binding."

          I didn't advise*; What I said " I don't think the letter would be binding. a landlord is not obliged to communicate its intention in advance of statutory notice. The intention can only be at the date of the letter; circumstances might change." You yourself said there are 3 landlords all elderly. As for whether the agent has the authority could also be an issue. i have neither seen nor read a copy of the letter and unless the most expensive solicitor has seen and read the letter for him/herself and ascertained the extent of the agent's authority I should be surprised if there could be no doubt.

          Frankly, I do not understand why the landlord should want to be committed to allowing you to renew when you are currently not the tenant (by assignment) and the landlord has no experience of having you as the tenant at these premises.

          I agree it is a very important point so far as you are concerned so I would suggest instructing whichever solicitor you prefer and let them formally advise accordingly.


          *Important: Reliance on Content
          I am not a lawyer and not qualified to provide legal advice. The information I provide is not intended to be legal advice and is for educational purposes only. Do not use this information to disregard any legal advice, or to delay seeking legal advice or representation because of something you have read or seen of mine on this forum. Any reliance upon the information given on this forum is at the user's own risk. I, Michael Lever, also known as rentreviewspecialist, exclude to the fullest extent lawfully permitted all liability for loss or damage, whether direct, indirect or consequential arising from your accessing, failing to access or reliance on information contained in my responses, contributions and information to and on this forum and website, from delay or the failure to respond to an enquiry, or from any information or omission contained in the information, etc.


          Comment


            #6
            Originally posted by Creagle View Post
            Contrary to advice received from rentreviewspecialist, the most expensive solicitor affirmed without doubt that the letter from the landlord's agent stating I will be allowed to renew my lease when it expires in just over a year is legally binding.
            Whilst I have not seen the letter, I have to entertain serious doubt whether the advice from the solicitor is correct. Can you set out the text of the letter, omitting identifying details?

            Comment


              #7
              Originally posted by rentreviewspecialist View Post
              "Contrary to advice received from rentreviewspecialist the most expensive solicitor affirmed without doubt that the letter from the landlord's agent stating I will be allowed to renew my lease when it expires in just over a year is legally binding."

              I didn't advise*; What I said " I don't think the letter would be binding. a landlord is not obliged to communicate its intention in advance of statutory notice. The intention can only be at the date of the letter; circumstances might change." You yourself said there are 3 landlords all elderly. As for whether the agent has the authority could also be an issue. i have neither seen nor read a copy of the letter and unless the most expensive solicitor has seen and read the letter for him/herself and ascertained the extent of the agent's authority I should be surprised if there could be no doubt.

              Frankly, I do not understand why the landlord should want to be committed to allowing you to renew when you are currently not the tenant (by assignment) and the landlord has no experience of having you as the tenant at these premises.

              I agree it is a very important point so far as you are concerned so I would suggest instructing whichever solicitor you prefer and let them formally advise accordingly.


              *Important: Reliance on Content
              I am not a lawyer and not qualified to provide legal advice. The information I provide is not intended to be legal advice and is for educational purposes only. Do not use this information to disregard any legal advice, or to delay seeking legal advice or representation because of something you have read or seen of mine on this forum. Any reliance upon the information given on this forum is at the user's own risk. I, Michael Lever, also known as rentreviewspecialist, exclude to the fullest extent lawfully permitted all liability for loss or damage, whether direct, indirect or consequential arising from your accessing, failing to access or reliance on information contained in my responses, contributions and information to and on this forum and website, from delay or the failure to respond to an enquiry, or from any information or omission contained in the information, etc.

              Many thanks again for your advice, this is all new to me and you've been a great help. I'm not holding you to account and know you cannot be a substitute to solicitors. I appreciate you discussing through and helping.

              Yes I agree the landlords should not have an incentive to commit, particularly at this stage. I believe the agent just believes they wouldn't have an interest in preventing me from doing so unless I was in breach of the lease, which if I were then, even with the agent's letter, breaches of the lease would override any commit the agent made.

              I guess what I really am trying to understand is can an agent ever act on behalf of the landlord or must it always come directly from the landlord? I assume the answer is it must always come direct, particularly when the lease expressly states written permission from the landlord must be granted. Why then it raises the question has the agent, whilst being polite and amenable, continuously refused to provide a signed letter from the landlords.

              Comment


                #8
                Originally posted by Lawcruncher View Post

                Whilst I have not seen the letter, I have to entertain serious doubt whether the advice from the solicitor is correct. Can you set out the text of the letter, omitting identifying details?
                Certainly, below is the segment of his email which will be of interest. It should be noted all emails he has sent begin "SUBJECT TO CONTRACT AND WITHOUT PREJUDICE".

                "Will your lenders accept a letter from myself as managing agent representing the landlords confirming that they are happy to approve the change of use and also confirming that we were looking at renewing the lease on the expiry of the existing lease? If they will accept a letter from me then I am more than happy to do that. I do have my client’s authority to provide such."

                Comment


                  #9
                  "SUBJECT TO CONTRACT AND WITHOUT PREJUDICE" rules out any possibility that the email is binding. In any event (a) "we were looking at renewing the lease on the expiry of the existing lease" does not indicate a clear intention (b) there is insufficient detail - the terms of the new lease are not set out (c) the formailites required for a contract for a lease for a term of more than three years are lacking.

                  Given that there are at least four reasons why the email is not binding I think you need to consider whether the solicitor who advised is one to instruct.

                  Comment


                    #10
                    "I guess what I really am trying to understand is can an agent ever act on behalf of the landlord or must it always come directly from the landlord? I assume the answer is it must always come direct, particularly when the lease expressly states written permission from the landlord must be granted. Why then it raises the question has the agent, whilst being polite and amenable, continuously refused to provide a signed letter from the landlords."

                    An agent can act on behalf of a landlord and there is no need for permission to always come directly from the landlord. It all depends upon upon a) the agent's authority and b) the extent of that authority. For example, for some landlord clients, I am authorised to make binding decisions without needing to take the client's instructions; for others I would reed to clear it with the client first.

                    As for a permission or consent under a lease, depending upon the nature of the matter for which permission/consent is required, it is usual for the permission/consent to be in the form of a licence (document) which would be signed by or behalf of the landlord depending upon the landlord's instructions.

                    Regarding the email, I agree with Lawcruncher that "SUBJECT TO CONTRACT AND WITHOUT PREJUDICE" together with LC's (a), (b) and 9c) rules out the possibility the content of the email is binding.

                    Assuming the email is the letter to which you refer, your statement "I have a letter from the landlord's agent stating they will allow me to renew the lease in 1.5 years time and have no intentions to remove me." is therefore a misrepresentation. I appreciate from what you say that this is all new to you but with respect it is a mistake to assume that how the agent phrased the communication amounts to the same thing.

                    As to the content, the agent asks whether your lender would accept a letter confirming that the landlord are…, etc. If your lender says yes then whether the letter that the agent provides would be binding would depend upon how it is phrased. Even if it were not marked 'without prejudice ' but simply 'subject to contract' I still have doubts that it would be binding except perhaps in the widest sense, namely that nearer the time a s25 notice or s26 notice would not oppose renewal.

                    Comment


                      #11
                      Lawcruncher and rentreviewspecalist, thanks again for your help and patience with what I assume are quite basic questions from your perspectives.

                      I believe I am best going back to the agent and just asking for a letter signed by the landlords, thus ensuring the lenders have exactly what they need. My other option is to ask exactly what authority the agent has but this could lead to greater delays and could be interpreted as somewhat contentious and lead to greater hassle than just providing a signed letter if the agent has to locate the years old licence proving their authority.

                      Just to clarify, even if the landlords do provide a signed letter stating they will allow the lease to renew, this would not be legally binding in 1.5 years time when the lease does expire?

                      However, surely a letter signed stating the landlords will allow me to change the use of the property and apply for planning permission would be? I believe there will be an expiry on the length of time their permission is valid, e.g. the previous licence to assign which I have had sight of states that it is only valid for three months.

                      --

                      On a different matter. I currently have a pre planning application in with the local council to advise if they will allow a change of use from A2 to A3 and A5 as well the installation of a flue. I know it is difficult to offer advice from a position of knowing very few of the details, however I believe it is unlikely I will not receive permission and this is also the opinion of other professionals I have raised the issue with. The property is in a busy commercial area and the flue is at the rear of the premises, where the neighbours are other commercial premises and is a disused yard area, one of the neighbours of the rear is a pub with a flue already installed.

                      Would you advise against signing the lease with only pre planning advice and not full planning permission granted? I asked, as full planning permission will take at least 8 weeks, that is a long delay to getting the premises, fitting it out and delaying the business's opening. The current tenant is also keen for me to move in on the 1st of August, which will obviously be before full planning permission is granted. I can of course disappoint them if I have to but I risk them finding a different tenant if I do.

                      Comment


                        #12
                        "Just to clarify, even if the landlords do provide a signed letter stating they will allow the lease to renew, this would not be legally binding in 1.5 years time when the lease does expire?"

                        Confirmed that it would not be leaglly binding.

                        "However, surely a letter signed stating the landlords will allow me to change the use of the property and apply for planning permission would be? I believe there will be an expiry on the length of time their permission is valid, e.g. the previous licence to assign which I have had sight of states that it is only valid for three months."

                        Better than a letter is incorporating consent in the licence to assign. That will make it binding.

                        "Would you advise against signing the lease with only pre planning advice and not full planning permission granted?"

                        Definitely.

                        It is really important not to rush into taking commercial property. You must get all your ducks in a row. You do not want to be stuck with a property you cannot use for the purpose you want to. If the current tenant has A2 use he has to realise that he has got to wait if someone wants to use it for A3 and A5.

                        The way to proceed is to tell your solicitor all you want to achieve so that he can make sure you do - or if it cannot be achieved that you do not proceed.


                        Comment


                          #13
                          "I believe I am best going back to the agent and just asking for a letter signed by the landlords, thus ensuring the lenders have exactly what they need"

                          And if the landlords won't sign but the agent signs pp the landlord, is that going to satisfy the lender? And if the letter is marked 'without prejudice' and/or 'subject to contract', what then?

                          "My other option is to ask exactly what authority the agent has but this could lead to greater delays and could be interpreted as somewhat contentious…"

                          I'm sure it would be interpreted as contentious. It's nothing to do with you what the agent's authority is. You asking could also do you disservice. For example, the agent might consider you a troublemaker and advise the landlord accordingly.

                          As for the planning permission, the planning system entitles anyone to apply for permission to develop any plot of land, irrespective of ownership. So you don't need either the agent or the landlord's or the existing tenant's consent for applying for planning permission for change of use. All that's necessary is that on the application form you (or your agent for the planning application) complete a certificate that provides certain details about the ownership of the application site and confirming that an appropriate notice has been served on any other owners.

                          The only permission you would need is under the lease, the landlord's consent for change of use. Even if under the lease the landlord's consent for change cannot be unreasonably withheld, that does not mean the request should be regarded as a mere formality. the landlord is entitled to ask questions and be satisfied with the answers.

                          Regarding the time limit on the previous licence to assign, are you confusing that with the expiration of the landlord's consent in connection with the completion date of the licence to assign

                          ----

                          I appreciate I know what I am doing whereas, with respect, you don't but this is what I'd do. I'd instruct an experienced solicitor well-versed in business tenancy law. Having discussed with the existing tenant what I want to achieve and got the tenant's agreement to an estimated time-scale, I'd ask the tenant to instruct his solicitor to a) send a draft contract to your solicitor for the assignment and b) the tenant to make a request to the landlord for i) licence to assign, ii) licence to vary the use and alter the premises*, subject to planning permission to be obtained at your expense, and iii) unconditional confirmation from the landlord that on expiry of the lease the landlord would not oppose renewal.

                          As the tenant's solicitors would probably be required to provide an Undertaking on Costs for the landlord's costs including landlord's agent's fees, the tenant would probably want you to agree to pay part of the tenant's costs for i) and the whole of the costs for II) and iii) as both latter requests are nothing to do with the tenant. Your solicitor would might/probably be required to provide to the tenant's solicitors an Undertaking on Costs on costs that are part borne by you and a separate Undertaking on Costs to the landlord's solicitors for all costs that are entirely yours. An estimate of costs would be provided before the Undertakings are given (so that the respective solicitors can be put in funds - which mean in your case that you would have to lay out the money in advance). Costs are normally payable whether or not the matter proceeds to completion.

                          ---


                          As Lawcruncher says "The way to proceed is to tell your solicitor all you want to achieve so that he can make sure you do - or if it cannot be achieved that you do not proceed." I agree.

                          ---

                          Edit: * I forgot to mention this. As you want change of use to A3 and A5, and mention a flue, likely you will need the landlord's licence to alter and the installation of a flue will likely involve structural alterations to the premises. Likely that would entail providing the landlord with detailed plans and specifications for the works. I should expect the whole of the landlord's costs in connection with a licence to alter to be borne by you.


                          Last edited by rentreviewspecialist; 02-07-2019, 13:32 PM. Reason: licence to alter.

                          Comment


                            #14
                            Thanks greatly again both. You're not wrong when you say I do not know what I am doing in regards to the lease, it is an area I do not have expertise and hence am being careful to select a suitable solicitor and am benefitting enormously from your advice.

                            "I'm sure it would be interpreted as contentious. It's nothing to do with you what the agent's authority is. You asking could also do you disservice. For example, the agent might consider you a troublemaker and advise the landlord accordingly." The landlord's agent has been quite willing to assist and accepts this is new to me (I imagine he is used to it as he lets a lot of small units to start ups) and has been willing to go what I would say is beyond what would be expected of him in terms of answering my questions, he wants to help. So he probably would not mind me asking exactly what his authority is legally, but as mentioned we do not want to rock the boat and his answer is unlikely to be satisfactory anyway, so as stated it will be best to get this incorporated into the licence to assign.

                            I spoke over the phone with another solicitor today who seems the best suited to the job of all those I have contacted. Once I get pre planning back this week, assuming it is positive, I plan to instruct them.

                            "The only permission you would need is under the lease, the landlord's consent for change of use. Even if under the lease the landlord's consent for change cannot be unreasonably withheld, that does not mean the request should be regarded as a mere formality. the landlord is entitled to ask questions and be satisfied with the answers." My solicitor advised a licence for alternations will be included in the package they have offered, which would satisfy the covenants in the lease for permission from the landlord for change of use, planning permission and alterations.

                            "Regarding the time limit on the previous licence to assign, are you confusing that with the expiration of the landlord's consent in connection with the completion date of the licence to assign" Yes, sorry I was not more clear that is exactly what I meant.

                            "It is really important not to rush into taking commercial property. You must get all your ducks in a row... The way to proceed is to tell your solicitor all you want to achieve so that he can make sure you do - or if it cannot be achieved that you do not proceed." I believe you are right, although the lease only has 1.5 years left and hence it would not be catastrophic if I did not get planning I will wait until I have full planning. During the 8 week planning permission window, I will have my solicitor do all the work necessary that they can so that assuming it is approved there are no further delays. My solicitor has stated everything they produce will include that the assignment is conditional on me receiving satisfactory planning permission. And that I would be liable for their abortion fees if I did not receive planning but obviously not for the assignor's nor landlord's solicitors fees. The reason I say it is not catastrophic if I do not get permission is because the unit includes an apartment on the top floor, which the lease allows subletting for and because I could get prior approval for change of use to A3 (it is only the change of use to A5 that requires full planing permission) I could potentially operate from the unit provided I did not offer takeaway as a significant part of the business, and I receive planning for the flue - however superseding that is the fact that having a less than ideal premises to operate from, even if it is not a great financial burden, which is not suitable for takeout and therefore requires fundamental changes to the business plan means it is worth holding off until full satisfactory planning and if not, walking away to a more suited premises.

                            I agree that as I am out of my depth in terms of the legal proceedings of the lease, a competent and experienced solicitor with relevant experience is what I need. The solicitor I spoke to today offered a 'package' with a total cost of £1200 - £2000 + VAT and will provide a breakdown of the time spent on completion so that there is clarity in where the costs came from. They stated the searches they undertake will be included for free, unless there are any issues which requires additional work, if there were he said the total cost of the searches could be £150 to £400 depending on the difficulty.

                            The cost break down (all are +VAT) was: Licence to assign £500-£600, deposit deed £150-£200, Licence for alterations £0, liaising with all parties including providing relevant documents to my lender £0, Exclusivity Agreement £450-£700. The total cost should therefore be £1100-£1500, so he appears to have rounded up significantly, any costs of the searches are additional, and I will therefore raise this with him. However since I will be provided a breakdown of time spent on each activity this shouldn't be an issue, ignoring the obvious agency issue. I believe his fees are in the right ballpark, would you agree? Of course if I do not go ahead with the exclusivity agreement, which is an option, his fees are reduced dramatically.

                            The exclusivity agreement is a very attractive proposition from my point of view, albeit an expensive one. Effectively, it would be a contract my solicitor would draft for the tenant to sign stating they will not assign to another party during the 8 week planning window, if they do, they will be liable for the costs of planning I have incurred. The idea being to disincentivize them assigning to anyone who makes an offer to take the lease from them earlier, with a premium or some other type of offer etc.. However, quite why the tenant would be willing to sign I cannot imagine. I put that question to my solicitor and eventually he stated I may need to offer them an incentive to sign, such as agreeing to pay the landlord's legal fees in full. Which leads me to my final question...

                            The current tenant told me very directly earlier in the week they expect me to pay the landlord's legal fees in full. I said this is not what I had expected and that I was also going to leave the negotiation of the landlord's fees to my solicitor, however I did explain I expected them to pay the landlord's fees as it is their lease whereas I am just the party taking over / saving them from their lease. The solicitor I spoke to today was also very much of the opinion that it is for them to pay in full and that he would negotiate that with them and that the lease is likely to state as the current tenant they are fully responsible for the fees. Potentially this is another reason to instruct this solicitor, as a previous solicitor I spoke to was much more of the opinion that it is to be negotiated and that a likely reasonable solution would be to split the fees. The tenant has advised after speaking with the landlord's agent that the agent's fees are £250 and the landlord's legal around £500. Do these fees appear reasonable?




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                              #15
                              This is beginning not to look like the right property for you. You will be incurring a lot of expense and only have the guarantee of 18 months. Even if you get a new lease that is going to incur more expense within a short period. If I were you I would look round for somewhere with an existing A3/A5 use with a longer lease or where a landlord is looking to grant one.

                              May I ask what experience you have running a restaurant/café/ takeaway?

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