New commercial lease

Newuser1987

I have had an offer of a 5 year lease on an office space accepted. There has been 2 conditions back which I am slightly cautious about.

1 - The lease will be full repairing and insuring.

2 - The lease will say no sub-letting.

I have spoken with the estate agent about both points and he has said the first will be a contribution towards the building insurance of £175/yr. In principle this is fine but I am not sure if I carry any liability with this is because an insurance policy is in place (that's what it is there for?).
The second is again in principle fine. However I am currently a business of 2 looking to hire 1 other. The unit has space for 4/5. The estate agent again has said the landlord has no issue with me giving a desk space to someone else and receiving money for that but in the lease agreement it cant allow "sub-letting". I get this because of the rights a formal sub-let desk would have but I just wanted to check that I am not being a fool to think I what I want to do would be an issue. 

I hope my questions make sense!

lincroft1710

New commercial lease, 

Find yourself a good solicitor who specialises in commercial property leases, as they can be complicated and definitely not for the unwary

Newuser1987

lincroft1710 said:

New commercial lease, 

Find yourself a good solicitor who specialises in commercial property leases, as they can be complicated and definitely not for the unwary

Yes I actually have a good friend who is a solicitor that handles commercial leases so I have this bit covered. I just wanted to get peoples personal experiences on the points I raised as I am interested in seeing how they work in practice.

Savvy_Sue

Newuser1987 said:

lincroft1710 said:

New commercial lease, 

Find yourself a good solicitor who specialises in commercial property leases, as they can be complicated and definitely not for the unwary

Yes I actually have a good friend who is a solicitor that handles commercial leases so I have this bit covered. I just wanted to get peoples personal experiences on the points I raised as I am interested in seeing how they work in practice.

Your solicitor is best placed to advise you on these issues, and may be able to negotiate, and one thing you almost certainly ought to have is break clauses! Also I'd strongly advice that you PAY for their advice, because an informal reading and chat isn't something you can 'rely' on.

Full repairing and insuring is quite normal, but again check with your solicitor whether your understanding about the £175 is correct. It may cover the buildings insurance (fire / flood / storm damage), but you may still be faced with paying for any repairs during the lease yourself, AND at the end of the lease you may be expected to return the space fully re-decorated / re-floored, even if it was in a not particularly good state of repair and decoration when you moved in.

And do take photos when you move in: I have known notice to be given and a list of repairs / redecoration required then arrived from the landlord which would have meant the building being returned in a FAR better state than at the start of the lease. Some polite negotiation soon sorted that out, but its success was probably because the tenant was a charity to whom the landlord felt some goodwill.

bris

Full repairing and insurance, this is a common term in nearly all commercial leases. The insurance covers the risks, fires floods etc. The repairing is at your cost which covers everything else not insurable, so yes you carry a lot of liability to make sure the office is in the same condition as you received it.

How they work in practice, well strictly, there is no consumer protection in commercial leases that tenants have when renting a home, the rules can be enforced and at all the cost back to you.

Sub letting is also a common clause, its not about single desks, it's about you moving out and letting it to someone else entirely.
Sub contracting can be a high risk to landlords.

Commercial leases can be negotiated, a decent solicitor can get rent free periods, reverse premiums and most importantly break clauses, take that one seriously, a break clause can be the difference between you losing everything or walking away down but not out. 

Newuser1987

Thank you for the replies.

Yes I was just trying to avoid bombarding my friend with too many questions as I am sure many will come up. However your answers are very useful. 

Paying for repairs to the lease itself doesn't worry me too much. The unit is only 400sqft and only contains a toilet and small kitchen. My concern is that my liability is beyond the demise of the lease (up to the plaster) i.e. the whole building. There is a flat above which accommodates two floors. If their drainage got blocked could I be liable. Its those type of things that worry me slightly. I guess the exact wording will come out when the contract is draughted.

The actual terms seem quite reasonable. first 6 months half rent, 6 months rolling break clause, 2 months deposit where 1 month returned after 12 months. 

Savvy_Sue

Newuser1987 said:

Yes I was just trying to avoid bombarding my friend with too many questions as I am sure many will come up. However your answers are very useful. 

Please, if you value your friendship, your sanity, the future of your business, ask your friend to accept you as a client and PAY FOR THEIR SERVICES, or to recommend you to someone else who knows this area of the law. 

And please, don't say you can't afford this. You really really can't afford not to get this right. And you won't know you didn't get this right until it's too late. And anything your friend has said will be useless to you, because you can't 'rely' on what they've told you, any more than you can 'rely' on what we've said. 

The only advice you can 'rely' on is the kind you have paid for, so that you can sue the pants off whoever gave it if it turns out to be wrong. Tell your friend I said this and see if they agree with me. :-)

Grumpy_chap

I agree with the other posters - you need professional legal advice (backed by PI cover), not just a friendly comment over a coffee.  I am sure your friend has PI cover, but the backing will not be there for you if it was just informal advice and your friend will not have spent the same time over it as a paid service.

Irrespective of loyalty to your friend, there may be benefits in acknowledging that business and pleasure don't mix and, for that reason, engaging an independent solicitor to review the lease and keeping your friendship.