I’ve received a commercial tenant’s application to assign a lease. I don’t like the sound of the proposed assignee can I simply ignore the request?
Statute prescribes that where landlord’s consent for an assignment is required a landlord must give consent unless it is unreasonable to do so and this must be done within a reasonable time. Case law has for several years suggested that reasonable time would be about 28 days however following a judgment in 2003 this could be as little as a week (if it would be unreasonable to refuse consent). A property litigator can advise you as to whether you can properly withhold consent by considering the case law in light of the facts and checking the lease for whether there are any conditions to which Landlord’s consent to assign is subject.
I have an assured short hold tenancy. How much notice does my landlord have to give me to terminate occupation before issuing proceedings?
To end a short hold tenancy at the end of a fixed term using a section 21 notice, 2 months’ notice must be given on or before the end of the contractual term. The landlord cannot issue proceedings under section 21 until the fixed term is over. If the AST has expired and now operates as a periodic tenancy at least 2 months must be given expiring on the last day of the tenancy. If the landlord serves a section 8 notice then there could be as little as no notice period, 14 days or 2 months depending on the grounds for termination cited.
I want to rent my commercial premises out but do not wish to grant the tenant rights offered by the Landlord and Tenant Act 1954 to remain in the Premises upon termination of the Lease. What can I do?
You can serve on the proposed tenant a notice in the prescribed form containing a health warning which explains that the tenant will not have the benefit of security of tenure once the lease ends. Crucially the notice must be served before the lease is granted but also before the tenant becomes contractually bound to enter it e.g. agreement for lease (but after lease terms are agreed).
Depending on the notice period the tenant must either then sign a declaration or swear a statutory declaration in the prescribed form, confirming that the tenant understands the significance of what s/he is signing. The new lease must refer to the service of the Notice; the Declaration and the agreement to exclude the provisions of sections 24-28 of the Act.
In recent times many sub tenants have found themselves in the anxiety inducing situation that a liquidator has disclaimed the superior tenant’s head-lease. Once this happens, the insolvent tenant neither has any rights nor obligations to the disclaimed property. But where does this leave you? Will this mean you are thrown out on your ear simply because your immediate landlord has gone bust?
Thankfully most probably not; provided you can meet the terms of the head lease that is! Whilst your insolvent landlord is no longer your landlord, and your sublease does not technically continue, your interest in the disclaimed property survives and you may remain in occupation for the term of the sublease. This has been described as a collection of property rights in the disclaimed property. Furthermore you can probably even still sell your interest to another.
As stated above, the existence of these rights is on the proviso that you comply with the terms of the head lease and not the sub-tenancy. This could work to your favour if the head lease terms are friendlier than those under the sublease. Of course this could also work against you and you may need help from a solicitor to review, advise and re-negotiate the position, certainly on the point of whether, it is sensible to apply for a vesting order which if granted means that the property will vest in you under the terms of the head lease. You should also seek advice if a Landlord has made an application requiring you to make an election to accept a vesting order or whether it would make more commercial sense to give up your rights in the Property e.g. possibly if there is a significant dilapidations claim under the head lease. Strictly speaking, the terms of the head lease are not directly enforceable between you and the head landlord but in practice this becomes a technicality as the landlord can re-enter the property for breach of the head lease terms despite the fact that the head lease has been disclaimed or that you have applied for a vesting order.
The landlord’s right to re-enter the property is also subject to your right to apply to court to get the property back (relief from forfeiture) but in order to succeed the terms are likely to be onerous and you will probably have to agree to honouring the terms of the head lease anyway including paying any outstanding rent due and remedying any breaches of covenant.
In conclusion it is wise to seek advice on your rights and liabilities under a sub-lease as soon as you become aware that a head lease is or is about to be disclaimed by a liquidator.