Worried about a request from a potential landlord....advice needed please!

TheGreenMan

Hi,
I am hoping to open a shop in the near future. We found a premises and agreed heads of agreement. One stipulation by the landlord was that we pay all legal fees. We put forth that we would but capping the landlords fees at £1500 inc vat (area = London).
The Landlord then agreed and requested we give an undertaking to our solicitor that we will pay all parties fees regardless of the outcome. We countered that we would do this but only if we pulled out. The landlord has now said that we can only proceed if we guarantee to pay all fees regardless of who pulls out or the outcome....

Is this unreasonable? Should alarm bells be ringing? We've as good as said we won't pull out, here's £1500 to prove it...but it's not good enough for the landlord...
I feel we would be really exposed if we agreed and thy could request whatever they wanted then....

Can anyone offer advise as to whether this is normal or unreasonable or if there is a middle-ground here??

Many thanks,
Pete

chalkie99

My feeling would be that you have not haggled enough.

It is pretty standard practice for Landlords to ask you pay their fees and, I reckon, pretty normal to say each side to pay their own.

That is how it has worked for me in the past and has always been accepted without argument.

In fact, nowadays you are probably in an even stronger position - we had no problem in getting premises recently by haggling on the rent payable and getting a rent free period up front.

TheGreenMan

thanks chalkie99.
I think we've haggled pretty hard i must say actually - dropped the rent by 30%, reduced rent reviews and added in an extra break-out clause. But on this issue the Landlord doesn't seem willing to budge....
If we're to haggle harder, I can't see any other avenue to go down but to threaten to pull out....unless there is another compromise I haven't thought of?
I want to make sure it is the only option and how reasonable a request it is before I risk losing the premises.....

COOLTRIKERCHICK

i should imagine your solicitor would advise on this, as he/she would be able to spot a potential loophole at 20 paces...

i feel the landlord is going to stick with this, as he has given in to your other requests.. reducing the rent etc.. just so he/she feels in control...

paulwf

Could you ask his solicitor for a fixed price fee? This is only an idea, I've no idea whether you are allowed to approach them but your solicitor should know what is and what isn't allowed.

If you know the fee up front at least you can decide if it is reasonable, and it may not be much more than £1500. I agree it is daunting to not know the fee up front, as a good commercial solicitor can charge over £200 p/h ex VAT I'm sure there is the temptation to round up rather than round down if you are paying.

TheGreenMan

Thanks for your replies cooltrikerchick and paulwf.

My solicitor has 'advised' me that he doesn't think this is anything "dodgy". He says until the credit crunch, the new tennant paying the landlords fees was standard practice but some changed tack with the recession - not this loandlord!

My solicitor isn't proving too pro-active in this case but I don't know if I'm making a mountain out of a molehill here......what i don't like is the fact that i will pay his fees even his he changes his mind on a whim!

I have stipulated a cap on the legal fees of £1500 so it won't be more than that but it's still a lot of money to entrust to someone with no guarantees...

What do you think?
Is there an insurance policy i can take to protect myself against losing the money??

COOLTRIKERCHICK

its allways a gamble, would there be any logical reason for the landlord to back out? the only one i can think of is that if someone else comes along and is prepared to paythe full amount of rent.

i know people who were buying a house, and done all the searches etc, and then the seller pulled out at the last minute, but htey still had to pay the costs.

You could try and put a clause in that the only way you will pay his legal fees if its a mutal/ both agree not to go through with the lease.

so in effect you are agreeing to pay his/hers legal fees if things dont go ahead, but only you both agree, and if he/she decides not to go through with the lease, they pay their own. OR pays a compnsation fee of a %age of their fees.

at the end of the day it all depends on how badly you want THAT premisies, are there any other premises that you could fall back on nearby if they dont budge...?

TheGreenMan

thanks for your reply cooltrikerchick.

you're right, it is always a gamble and i suppose the bottom line is are we willing to tkae that gamble!

you see, we already offered to pay his fees it we pulled out so i find it strange that that is not good enough for him....it makes me wonder whether there is something he is going to put in the lease that will somehow really tie my hands...

unfortunately there are no 'fall back' shops around so it's do or die....is it really common practice to give someone such unilateral power when drafting a lease that will tie you in for at least 3 years??

COOLTRIKERCHICK

TheGreenMan wrote: »

thanks for your reply cooltrikerchick.

you're right, it is always a gamble and i suppose the bottom line is are we willing to tkae that gamble!

you see, we already offered to pay his fees it we pulled out so i find it strange that that is not good enough for him....it makes me wonder whether there is something he is going to put in the lease that will somehow really tie my hands...

unfortunately there are no 'fall back' shops around so it's do or die....is it really common practice to give someone such unilateral power when drafting a lease that will tie you in for at least 3 years??

we had a 10 year lease with a 5 year opt out.... and we did,

we were blinded by the position of the shop, it was in a prime position, and thought we just had to have it, in hindsight sp? we were blinkered, and the landlord/lady tied us in circles.. even though the lease went through solicitors and they highlighted things to us.

3 years is about the norm, with a 1 year opt out.

look at it from their point of view... just imagine you owned a shop/building what would you rather it being leased out for 3 - 5 years and having some sort of security and ommitment, or having loads of tennants over that time, and also having the shop empty part of the time too.

it all comes down to how badly you want THAT shop to commit to it.

I am prob totally going off here, and you prob have really thought everything through. but as you will be tying yourself into a lease... have you thought about if things are quiet... will your business be able to pay all the bills and the lease for 3 years?

we got bitten badly by a lease... so please dont get blinkered by that shop...and dont be afraid to walk away from it, if it doesnt feel right.

dont mean to put you off......lol.... allways good to have a backup plan...:D