Do I need a solicitor to renew a lease?

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    Do I need a solicitor to renew a lease?

    Hi everyone,

    The tenant and I have agreed a lease renewal on the same terms. The tenants solicitor will be preparing the draft. My question is do I need a solicitor to renew the lease and why? (I am trying to cut back on costs) And if the tenant wanted to add anything new into the lease or alter anything, do they need to ask first?

    Thanks in advance.

    #2
    hopefully the tenant's solicitor will draft a deed which simply extends the term; and not imposes any onerous new conditions or covenants on you.The trouble is with solicitors and especially when acting for Tenants is that their training is to seek to improve on the bargain. So I couldn't recommend to you to do away with the services of your own lawyer unless you are very familiar with commercial leases.

    Comment


      #3
      Thanks flyingfreehold,

      If they do try to impose any onerous new conditions, wouldn’t they need to make aware of them when asked? I’m not very familiar with commercial leases but do I need to be? if the lease terms are the same, I could compare it with the previous lease word for word, if I find anything that’s new I could ask them what it means, surely they can’t lie?


      Comment


        #4
        if i were drafting this it would be a simple deed that refers to the landlord and tenant's identity and the previous lease, by date, the demise and which operates to vary the term of the existing lease so that instead of being for say three years the lease is varied by the deed to run for six years. It can be that simple. its difficult to advise you without knowing for example whether the tenant has made any alterations and whether the lease would become registerable if varied so as to run for more than 7 years

        Comment


          #5
          Yes the lease renewal would be over 7 years, does that mean I would need a solicitor to register it?

          Comment


            #6
            "Yes the lease renewal would be over 7 years, does that mean I would need a solicitor to register it?"

            The tenant would register the lease, not the landlord. The lease should contain a Land Registry compliant plan, the preparation and cost of which is normally paid for by the landlord unless otherwise agreed.

            If you entrust the tenant's solicitor to draft the lease and provided you tell the solicitor that you have no experience of leases and ensure the solicitor is fully aware of that then in principle the tenant's solicitor would have to draw your attention to any changes from the existing lease, However, the solicitor wouldn't have to explain the consequences / implications for you of any change(s).

            There's another factor you'd be up against and that is the relationship between the solicitor and the tenant . The scope of the duty of care owed by a solicitor to his client depends on the instructions he receives and the circumstances of the case. Where the client is experienced and the transaction involves no hidden legal pitfalls the solicitor is not obliged to investigate matters outside his instructions or warn his client of commercial risks involved in the transaction.

            Comment


              #7
              Under no circumstances would I let the tenants solicitor draw up the lease.
              The tenant is the solicitors client not you.

              You need to take control of your investment.
              The first thing I would do is have a ring round different Solicitors who do Commercial Leases, Some Solicitors are better at Commercial Leases than others and insert different clauses in a lease which other solicitors do not.

              For instance, I had a tenant in one business property where I used a solicitor who I have used for 20 years, and when I asked for a quote for a different lease on another property I was told £1000 and they wanted a month, Rang another solicitor and was quoted £750. and they could draw it up in a week.
              And I am glad that I changed as a clause was inserted which I did not really appreciate until at the end of the 10 year lease the clause allowed me to charge the tenant for the cost of a Schedule of Dilapidations, and in case it went to court I had to get a firm of Chartered Surveyors who would also be prepared to go to court if there was an argument. I was quoted £2000 plus Vat.. Whereas if this clause had not been in the lease I could have been faced with that cost myself.
              The chances are that the solicitor your tenant wants you to use certainly would not suggest that clause.

              The second thing I would do is consult a firm of Chartered Surveyors about how much rent to charge, you may find that they will suggest more rent.

              Plus many landlords apart from using their own solicitor say to the tenant "If you want a new lease (or lease renewal) the tenant pays for the lease. The first time I became a tenant in business premises was 1975 and I HAD to pay my landlords legal fees. Another lease in 1984 from a Local Authority again I was charged. On another property where I was a tenant for 24 years with 4 leases every 6 years I had to pay,
              Although what I have done with my tenants more recently is ask for a £500 contribution towards the costs.
              You should not unduly concern yourself with the cost of the lease, it is the tenants job to pay for it.

              And as a final note, we all get older, your tenant has been there for 7 years, you may decide at some time to sell the property, if your new lease does not say that it is "outside" the 1954 Landlord & Tenant Act, and you grant another 7 years, you may find you cant get them out to sell it
              Good Luck.

              Comment


                #8
                Actually Piffy is incorrect. There is a specific act of parliament called The Costs of Leases Act, 1958 and clause 1 says

                Costs of leases.


                Notwithstanding any custom to the contrary, a party to a lease shall, unless the parties thereto agree otherwise in writing, be under no obligation to pay the whole or any part of any other party’s solicitor’s costs of the lease.

                So a well advised tenant can quite properly say I will not pay your costs. My practice is to use the Law Society Preprinted lease for Business Premises. The forms cost a few pounds each, and the lease is devised to be fair to both sides. It is not as tough as one produced by a landlords solicitor, but it does the job and neither side needs a solicitor. (except that a lease for more than 7 years is compulsorily registerable- at the tenants cost)

                Ultimately the tenant either pays the rent or he doesn't. All the rest of it amounts to a series of props. Even dilaps. Its rarely if ever worth going to Court.

                Comment


                  #9
                  Thanks for your replies everyone.

                  I think the point of my question has been missed. Does it make any difference who drafts the lease? because it’s a lease renewal and the current lease is protected by the landlord and tenant act. I believe the tenant has the right to the same terms so I think that would mean I wouldn’t be able to add anything new or change anything if I wanted to? So the point of my question is that, if everything in the renewal is the same as the existing lease and I’m unable to change anything then why do I need a solicitor? Could I check and sign the lease myself? or is that not possible? because a solicitor would be required, for example to sign the lease as a witness, do checks, searches, registering etc.

                  Comment


                    #10
                    OK. When one of my business tenants was due for a lease renewal, on this occasion I went back to the solicitor who had drawn it up previously.
                    It had been a 3 year lease which was being renewed. I even thought of getting the existing lease (which was only two years and nine months old, ) typing it all out myself, changing the dates and getting the tenant to sign it, thus saving me solicitors fees.
                    However perhaps due to case law, my solicitor informed me that due to increased tenant protection the tenant had to be more aware of the ramifications of the fact that the lease was outside the 1954 Landlord & Tenant Act, and to that effect in the lease he stipulated that the tenant "had" to take the lease to a solicitor or Commissioner of Oaths and sign a prepared page that he understood that the lease was outside the 1954 Landlord & Tenant Act.
                    Perhaps it was because I had mentioned that at some time in the future I would want to sell my property.

                    I wonder how many landlords have been renting out Commercial Properties without safeguarding their position by making certain that at the end of a lease, that if they want to sell they are able to put the place up for sale

                    Comment


                      #11
                      "I think the point of my question has been missed. Does it make any difference who drafts the lease? because it’s a lease renewal and the current lease is protected by the landlord and tenant act. I believe the tenant has the right to the same terms so I think that would mean I wouldn’t be able to add anything new or change anything if I wanted to? So the point of my question is that, if everything in the renewal is the same as the existing lease and I’m unable to change anything then why do I need a solicitor? Could I check and sign the lease myself? or is that not possible? because a solicitor would be required, for example to sign the lease as a witness, do checks, searches, registering etc."


                      Typical of landlords whose knowledge of business tenancy law is, with respect, somewhat limited, it is not that the landlord cannot change anything in a renewal lease but that any change(s) should not be more onerous than existing and if they are then there must be quid pro quo exchange: ie, the tenant gets something in return.

                      Generally, on renewal the respective parties' solicitors and surveyors (advisers) will want to update the renewal lease to prevailing practice and are able to. do so provided any changes are, as I have said, no more onerous.

                      As a (informal) rule, the onus is on landlord (landlord's solicitor) to draft the lease and the tenant (tenant's solicitor) will approve.

                      The sang with template leases is that when they are used without modification if little or no thought is given to to the type of property and for rent review the source of evidence for market rent the landlord can use out when up against a well-advised tenant.


                      --

                      Regarding contracting out of LTA54, this can only be done a) on new letting where the tenant has no choice, b) on renewal provided the tenant agrees, c) on renewal when the tenant is none the wiser or doesn't mind,

                      Since often the property would fetch a higher price when let than with vacant possession, whether it is advisable to grant a lease outside the Act depending upon the nature of the proposition.

                      --

                      ps - there is no reason why la landlord cannot prepare the lease without a solicitor, provided the property isn't mortgaged - mortgagees want to be sure the the security of the asset is not compromised - and the landlord isn't concerned that lack of experience would prejudice the investment.

                      Comment


                        #12
                        To answer post 9 in the terms in which it is posed: No you do not need a solicitor.

                        However...

                        When asked if a conveyancer is needed for a commercial lease I usually say:

                        Unless the premises are a store under the arches being used in connection with an import/export business, the parties to a commercial lease should always engage a conveyancer.

                        The above definitely should be the case if it is not a renewal. On a renewal, and for the reasons stated in post 8, there can be some relaxation of the rule if what has been negotiated is a new lease on the same terms as the old with only an increase in rent. In principle there should be no objection to the tenant's solicitor drawing up the new lease so long as either:

                        (a) the new lease follows the old lease exactly apart from rent and rent review dates;

                        or.

                        (b) the new lease is a short form which incorporates the terms of the existing lease by reference apart from rent.

                        There are though traps for the unwary. A significant one is getting any rent review wrong. If, for example, the existing lease says that the rent is to be reviewed on 11th April 2016 and a short form is used, the rent review date needs to be expressly confirmed otherwise the new lease will have a rent review date in the past.

                        Whilst, as you are aware, a tenant on a renewal is basically entitled to the same terms, a renewal should be taken as an opportunity to review the terms of the lease to check they are satisfactory and that they do not need updating to take into account any changes in the law.

                        In part your decision has to take into account what is involved. The higher the rental value the more critical it is to get the lease right. You can probably be more relaxed about a lock-up shop in a tertiary zone or a starter unit on an industrial estate than you can about a supermarket or a large factory. When it comes to value do not think about the annual rent but about the minimum amount of rent payable over the term. If the rent is 15K p.a. the minimum rent payable over the term is 105K. Would you buy a property for that sum without instructing a conveyancer?

                        The counsel of perfection is to employ a conveyancer. The decision of whether to do so is yours.

                        EDIT: The above posted without seeing post 11.

                        Comment


                          #13
                          I would mention that when my solicitor did a lease renewal the new lease was outside the 1954 Landlord & Tenant Act.
                          Plus we had a someone who was interested in buying the property (with a sitting tenant) and their solicitor wanted to see a copy of the lease before we offered it to the tenant.

                          Comment


                            #14
                            "Unless the premises are a store under the arches being used in connection with an import/export business, the parties to a commercial lease should always engage a conveyancer"

                            Interesting example.

                            The leases of arches that Network Rail granted before selling its portfolio to The Arch Company were and continue to be sophisticated and full of pitfalls for the unwary.

                            Comment


                              #15
                              Originally posted by rentreviewspecialist View Post
                              "Unless the premises are a store under the arches being used in connection with an import/export business, the parties to a commercial lease should always engage a conveyancer"

                              Interesting example.

                              The leases of arches that Network Rail granted before selling its portfolio to The Arch Company were and continue to be sophisticated and full of pitfalls for the unwary.
                              My example is not of course intended to be taken seriously. It is just suggesting that if both landlord and tenant are a bit dodgy and there is a possibility that the premises will be used for storing contraband or goods that fell of the back of a lorry there will be honour among thieves.

                              Comment

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