Don’t get left out-side with your New Business…
We all know how exciting it can be to start a new business, obtain or move your business to a new property. Finding a new property that is perfect for your business venture may seem like an immeasurable step to take, but once you have found “the one”, it is hugely important make sure you don’t get caught in a legal mine-field.
Many businesses see the value of taking on a leasehold property. It gives businesses a secure venue to operate in, with only a fraction of the cost. It is vital to have a good working relationship with the owner of the property; after all, if things go sour it could be bad news for you and the future of your business.
John Knight, Commercial property Solicitor and business growth specialist of Wosskow Brown Solicitors points out some common issues that leaseholders and landlords face when it comes to commercial property for a business.
“The most common issues actually crop up when the lease comes to an end, and either you are moving your business else-where, or you are renewing the lease to stay put. When it comes to moving out of the property, your landlord has to ensure they can get a new tenant in quickly to cover their costs and keep the building occupied.
Often there can be disputes if the landlord thinks that you, as the lease-holder, have damaged the property, or allowed it to dilapidate. This is because it means the landlord will have more difficulty leasing the property out again to a new tenant, if repairs are needed.
If you do find yourself in a dispute where your landlord feels that you should be funding repair for the building, you will have to prove that the damages being claimed for, were either already part of the property before you took the lease on, or that the damages should be covered by the landlord themselves.
At the time, this can be difficult and costly as you will often need to take advice from a dispute litigation solicitor, who can argue your case. The best way to protect yourself from having to go through this costly process is to commission a ‘Schedule of Conditions’ when you take on a lease. This is a document which essentially indicates the overall condition of the building. For this, you will need an independent surveyor to produce a report on the buildings condition. This usually relates to the structure of the building, and any issues such as damp or collapsing roof’s or walls, and not generally to aesthetic conditions such as a dodgy paint job. Often photographic evidence will need to be taken to document the general condition of the building, which will then provide your evidence if any disputes arise in the future.
Schedules of conditions can then be reviewed when you come to the end of the term of your lease, and are your legal proof that you have left the building in the condition you found it in.
In some circumstances, if a building is very old or the lease you have taken out is very long, there is an expected amount of dilapidation, which is commonly referred to as “wear and tear”. You should discuss what agreements can be made in your lease as to whether you or your landlord is responsible for repair from “wear and tear”. More often than not, it is stipulated that you, as the lease-holder are responsible for this, and therefore should calculate an expected budget for repair to the property if you intend to move your business else-where.
The best advice we can give is to consider all the possible outcomes from taking on a lease on a particular building. If the independent survey indicates some troubling issues, it may not be wise to enter into that lease without some agreements being made before your business moves in. Consider your business plan, and whether or not you may need to move your business in the future.
Once you have entered into a lease, you are contractually bound to pay for the full term of that lease, and only in extreme circumstances is it possible to negotiate out of that contract. It is worth picturing how your business will be operating in five, ten or twenty year’s time, and make sure you plan your lease appropriately with your solicitor.”