Charity lease query

emv

I am renting a building to a charity and wish to include a term in the lease that will mean that if the charity's income in any quarter is not sufficient to pay the rent that the rent will be rolled forward to the next quarter. Is there a particular form of words I should use?

paddyrg

Commercial leases are complicated - see a commercial property lawyer to make sure this doesn't backfire spectacularly!

Robin9

emv wrote: »

I am renting a building to a charity and wish to include a term in the lease that will mean that if the charity's income in any quarter is not sufficient to pay the rent that the rent will be rolled forward to the next quarter. Is there a particular form of words I should use?

The charity is required to hold sufficient funds to cover this eventuality. It should have a formal policy.

emv

It's a new charity, we're happy for them to lease the space rent-free until they have a sufficient income. I have a lease drawn up which is based on a model for renting to a charity, it's just this clause that I'd like to add.

PlutoinCapricorn

What makes you think they will ever have a sufficient income? Will the donors be happy for their contributions to be spent on rent?

phill99

PlutoinCapricorn wrote: »

What makes you think they will ever have a sufficient income? Will the donors be happy for their contributions to be spent on rent?

Thats a ridiculous statement.

Every charity in the country has fixed costs which have to be paid by the charity. These will include rent, utilities, employed staff, postage, stationary etc.

People seem to think the charity sector is a lovey dovey existance with violet scented old ladies selling cakes at a fete for the benefit of the disposessed.

lincroft1710

I think PiC is implying that it would seem that the charity's income could be so low that by the time they have paid the rent, there is no money left to be used for actual charitable purposes.

PlutoinCapricorn

Yes, new charities are very different from the established household names.

jackyann

Would it be easier to offer them a peppercorn rent for say 6-12 months, then review?

paddyrg

What JackyAnn says. Or start on a fiver a month, then ten, then twenty, then forty, sixty, eighty, a hundred, etc until you get to the target rent. Gives them some as good as free run-up time, but still on a professional basis

emv

What's difficult for us & them is that they may be successful in getting in some grants (which will cover rent & other such expenses) quite quickly - in which case they'll be able to pay. If not, they won't be able to but if they have the money (which has been ringfenced for rent, rather than affecting core activities) then they'd rather pay us. So having a clause that meant rent wasn't payable until & unless there was money to cover it (and an agreement with the trustees that this would mean income double potential rent payments to avoid ALL income going on rent) seems like the best middle ground.