Commercial leases Flashcards
Duration
for many years the standard lease was 25 years
alienation
include the standard provision prohibiting the tennant from assigning or subletting the lease without the landlords consent
- common to include a prohibition against creditor or managers of creditors
- allow the landlord to retain control over the choice of tennat who occupies the property
- the position at common law is the tennant can assing to whoever they want
- will normally want the addittion that consent willl not be unreasonably withheld
payment of rent
- normally paid quarterly in advance of the four scottish qaurter days.
- usually a provision for interest to be paid to the landlord in the event of late payment of rent or any other sum of money due
- don’t state a specific rate but a formula related to a current bank rate
- if too high the court can declare it a penalty
use of premises
- reinforces the common law provision that the tennant may only use the prop for the purposes which it was let
- can lay down the types if bussiness that has to be carried on
- it is not in the landlords interest to tie the tenant down to tightly to a particlar use of the premises as this can affect rent review
- allow a qualification that the landlords consent to a change of use will not be unreasonably withheld
- another solution is to limit the tenant to a use within a particular class of town country planning
- common to have clauses that prohibit any use of the prop that would be a nuisance to neighbouring tenants
insurance
- the most common lease is the tennats full repairing and insurance lease. this means the tennent is made responsible for all repairs and for repayment of the insurance premiums.
- if the prop is not an isolated one will recover the costs through a service charge.
- frustration - in the event of damage or destruction this will not end the lease. the tennant will be given the right to an abatment of rent. the landlord opts out of rei interitus
- extent of cover - unless specifically provides otherwise, the insurance cover will not provide indemnity for anymore than the actual loss suffered.
- a tenant whose obligation is merely to maintain the prop, and not to replace it in the event of accidental damage has no insurable interest to recover it’s vlaue merely as a result of having paid premiums
alterations and additions
- at common law a tenant is prohibtied from making major alterations to the prop and may be required to reinstate it
- normal for leases to say you can’t make any alterations or additions
- if the alterations substantially add value to the prop could end up paying for them twice in the form of an increase in rent
irritancy
allows the landlord to terminate the lease if any one of a number of specified breaches by the tenant should occur
- will want the right to ammend anything observed in the irritancy
general
- the landlord is obliged to keep the prop in tenantable or habitable condition
- the landlord will normally reserve the right, in the event of the tenant failing in these maintence obligations, and charge them to the tenant
- the landlord will probably reserve a right to access to the prop to inspect it’s condition
- common for a landlord to contract out of the common law obligation to porvide subjects that are reaosnably fir for the purpose of the let
inherent defects
arises in leases of new buildings in relation to some fault of construction or design that was not apparent at the start of the lease
- in extreme cases the defect may amount to frustration by constructive total destruction this relieving the tennant of responsibility
- in the tennants interest to insist that the repairing obligation be modified to free the tenant of such responsibility.
- in the tenants interest to insist that the repairing obligation be modified to free the tenant of such responsibility
- it may be possible to ensure against the defects or landlord may have a claim agaisnt the contractor responsible
older buildings; extra ordinary repairs
- the standard provision of making the tenant liabel can make them liable for costs in an older building resulting from wear and tear that occurred prior to the commencement of their tenancy
house of fraser plc v prudential assurance co ltd
- the lease wording was suffciently comprehensive to make the tenants liable for the costs of such a repair
co-operative insurance society ltd v fife council
3 main considerations between ordinary and extraordinary repairs
- the origins of the dmage eg whether or not it was caused by a fortutitous event, unanticipated and outwith control of either party
- the extent or seriousness of the damage
- the nature of the damage and wether it would require total construction or something short of that
long leases
the standard repairing obligation will not normally require the tennat to reverse the ageing process so as to provide a building that is good as new
west castle properties ltd v the scottish minsiters
in good and tenable condition and repair does not require the tenants to reverse the natural ageing process
other cosiderations
- if a lease provides that repairs will be carried out to the satisfaction of the landlord must be reasonable in deciding what standard of repair will meet this criterion
