Drafting a Commercial Lease without a solicitor is risky business. With the public feeling increasingly empowered through the Internet to take more control of their legal transactions, it is of course completely feasible to draw up a private contract between a landlord and tenant but attempting a DIY lease is madness for both landlord and tenant. If something goes wrong, it’s likely to be an expensive mess to sort out, as a recent client has discovered.
“The Landlord’s Heads of Terms clearly stated the tenant’s company but the solicitor when she sent the draft lease put the tenant’s personal name. The tenant didn’t seek legal advice or check the details. He signed and completed. He’s now being chased for £50,000 as the company went bust.”
The law relating to commercial property is extremely complex. A lease creates a binding contract between landlord and tenant and will represent a major financial commitment so it’s key that any new lease matches a business’ requirements.
Of course, it’s possible to buy a template lease online but the difficulty is that a tenant in particular may not fully understand the impact of all the terms. We can’t emphasise the importance of not entering into any legal agreement until you fully understand all of its terms and conditions.
The first step will be the agreement of terms with the Landlord or its agents, which should be recorded in a document known as the Heads of Terms. The Heads of Terms are not themselves a Lease, so once they have been agreed the Landlord is likely to instruct its solicitors to prepare the actual lease.
It’s tempting to assume that the proposed Lease will automatically and correctly reflect the agreed Heads of Terms. Before signing on the dotted line, it’s vital to ask a commercial solicitor to check the draft Lease and ensure any necessary amendments are made.
Commercial Leases will contain many clauses that will not have been previously discussed. These are usually fairly standard but they can have a serious impact on the tenant so legal advice on their meaning is essential.
Many tenants who take on business leases without getting a solicitor’s advice subsequently find themselves in difficulties because of clauses in the lease which they have not understood – or even realised exist.
Whilst the cost reduction of bypassing a commercial solicitor might be tempting, the risks to both parties are simply too great. Drafting a Commercial Lease requires legal advice for both sides. It’s an absolute must.
See more of our content and news on LinkedIn