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Breach of covenants and lease termination
Whether you are a landlord or a tenant, it is important to be aware of the obligations under your lease. These terms are binding and may be enforced against you. As a tenant you may be faced with a situation where you are unable to meet the rental obligations. Conversely, you may be a landlord left with little option but to take steps to remedy your tenant’s breaches.
At Saracens we recognise that commercial properties are often a valuable source of income for landlords. The commercial property team is experienced in advising landlords on the legal and strategic methods by which their interests can be protected if for example rent is unpaid or the property falls into disrepair.
Most commercial leases are full repairing and insuring (commonly referred to as a FRI lease) leases. It is standard for a commercial lease to create an obligation on the part of the tenant to keep the property in good repair. Depending on the provisions of the lease, this means that the tenant will have to ensure the property is maintained. Tenants are usually required to put the property in a good state of repair at the end of the term and this is an area in which many disputes arise. For example, we often advise tenants / landlords to ensure that a schedule of condition is appended to the lease (to be agreed between the parties at the beginning of a lease) and adapt the repair covenants accordingly.
Where there is a breach of covenant by a tenant, the terms of a lease will entitle a landlord’s right to invoke forfeiture procedures such as the right to peaceably re-enter the property in the absence of obtaining a court order for example where the tenant has failed to pay rent within a specified time. In other circumstances, a landlord may be required to serve notice requiring the tenant to remedy the breach in the first instance – failure to do so will permit the landlord to take further action. Saracens are well placed to advise clients on the legal implications of a lease and will provide you with commercially focused solutions when faced with either problematic tenants or difficult landlords.
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