LEASE ASSIGNMENT OF A COMMERCIAL LEASE
This is where you are agreeing to give, or take, the benefit of an existing lease. In this case, the basic terms of the Lease have already been agreed and cannot be changed.
The rent may have increased from the initial rent agreed at the commencement of the lease (as there may have been one or more rent reviews) and you will have only the benefit of the remaining period of the Lease (if the lease provided for a term of 20 years and 5 years have already elapsed, the remaining term is 15 years).
We are able to offer legal advice to either the landlord or the tenant on assignment of commercial leases. There is usually an absolute prohibition in a lease against assigning just part of premises (e.g. one floor of a building with several floors). A landlord will normally, however, allow a subletting of a part of the property. When a tenant sublets a property, that original tenant remains fully responsible for the entire property and rent, but he then passes on those obligations to the sub-tenant, sometimes known as the under-lessee, in respect of the part that is sublet to them.
A tenant may apply to their landlord to assign or sublet the whole property, or sublet part of it, and the lease would determine how the landlord is to treat that application. The Landlord and Tenant Act 1927 may apply and imply reasonableness on the part of the landlord. A commercial lease generally focuses heavily on assignment of the lease, it being crucial not only to the landlord in terms of value of the premises and credibility of the tenant, but also to the tenant who may wish to dispose of the property. There are numerous factors, which are either explicit in the lease or implied by statute, on lease assignment which has to be carefully considered by a commercial property solicitor.
The landlord is concerned as to the market value of their lease, and the financial credibility of the tenant. A tenant needs to know that it can dispose of premises simply if they become surplus to their needs. An experienced commercial property lawyer will be able to guide you through the provisions that affect any form of alienation.
An important consideration governing the disposal of premises or part of the premises by the tenant is that there is an implied term of reasonableness. A landlord should allow a tenant to sublet where a similar quality sub-tenant is found.
Sometimes there is a provision that is found in many leases which prevents a lease being offered to a sub-tenant by an existing commercial lease holder at a lower rental rate than that provided for in the original lease. This is a term in most leases which protects the landlord’s position when it comes to the rent reviews of other tenants in the development. The landlord does not want other tenants using this new subtenant’s low rent being used as a lower comparable in their rent review negotiations.
Leon Kaye Solicitors are fully accredited members of The Law Society’s Conveyancing Quality Scheme. For advice on commercial law property matters please either email firstname.lastname@example.org or call us on (Chelsea office – 020 7228 2020 or Knightsbridge office 020 7095 0930.