<strong>YOUR LEASE-A BENEFIT OR A BURDEN</strong>
<strong>By Jilu Ahmed, Solicitor and Principal of Eton Law Solicitors</strong>
<p style="text-align: justify;">Most restaurateurs occupy premises by virtue of a Lease and during the Lease a Tenant remains liable to pay rent and observe the terms. A Tenant will be unable to assign the Lease without the Landlord’s consent which is unlikely to be given unless the Tenant guarantees that the assignee will perform the covenants in the Lease. A business entering into possession of Leasehold premises without the Landlord’s written agreement and a Deed of Assignment, acquires no right of occupation and can be thrown out by the Landlord.</p>
<p style="text-align: justify;">Part II of the Landlord and Tenant Act 1954allowsa business Tenant to renew its Lease at the end of the term subject to conditions although it is increasingly common for the parties to agree to exclude this right. A Lease might contain provision entitling the Tenant to terminate the Lease part way through the term, commonly called a break clause. The length of the term, exclusion of the 1954 Act and the Tenant’s right to break the Lease will affect the level of the rent. Renewal under Part II and the exercise of a break clause is usually conditional upon the Tenant fully performing the terms of the Lease.</p>
<p style="text-align: justify;">Most Leases impose upon a Tenant an obligation to repair and maintain the property, an obligation which is far from straightforward. There is a world of difference between a covenant “to keep in good and substantial repair and condition” and a covenant “to put and keep in substantial repair and condition. If the Tenant fails to maintain and repair the Landlord has a number of remedies. He could serve on the Tenant a notice specifying the failure and giving the Tenant an opportunity to remedy the breach; if the Tenant ignores the notice the Landlord can take steps to end the Lease. A Lease will also allow a Landlord to undertake remedial work where the Tenant has failed to do so and the cost of that work can be recovered from the Tenant as a debt. At the end of the term the Tenant has lost the right to carry out the repairs and the Landlord’s claim against the Tenant is in damages although subject to a number of restrictions. Repairing obligations should not to be taken lightly.</p>
<p style="text-align: justify;">If the rent is not paid when it is due, most Leases will allow the Landlord to reenter the premises and take possession. In the case of business premises the Landlord does not even have to go to court. Bailiffs will attend the premises early in the morning, gain entry and secure the premises against reentry by the Tenant. If the Tenant wishes to get the premise back he must apply to the court for relief which will only be granted if the Tenant pays the Landlords costs and expenses, which can be substantial, and arrears of rent. Forfeiture of a Lease is an unpleasant and expensive experience and should be avoided at all costs.</p>
A Lease contains serious long term obligations and should not be entered into without first obtaining legal advice.