Lease Reviews: The importance of a tenant understanding their lease terms.

Why is it Important for a Tenant to Understand the Terms of Their Lease Before Becoming Contractually Bound.

Entering into a lease can be a huge commitment for businesses and an important step in the growth of your business. However, far too often, tenants commit to being contractually bound by their lease without fully understanding the legal implications.

We regularly advise clients who are already bound by terms they didn’t fully understand or didn’t know they could negotiate.

Before you sign any lease agreement, here are some points why you should have your lease reviewed by a solicitor.

Legally Binding Contracts

A lease isn’t just a formality; it’s a binding legal agreement. Once signed and dated, it creates enforceable obligations and covenants between the tenant and the landlord. The obligations and covenants can range from how much rent you pay, how you pay your rent and when, to who is responsible for repairs, and how and when you can leave the property.

Highlighting Unfair or Unusual Terms

Leases can potentially contain terms that are heavily one-sided in the landlord’s favour. These may include:

· Excessive service charges;

· Clauses allowing sudden rent increases;

· Unclear repair obligations;

· Restrictions on how you use the property and the times in which you can use the property.

Understanding Hidden Costs

In addition to rent, tenants may also be responsible for:

· Utilities

· Business rates

· Maintenance and repairs

· Insurance contributions

· Landlord’s legal costs

Clarification - Repair and Maintenance Responsibilities

One of the most common disputes between landlords and tenants result from uncertain repair obligations. Some leases include a tenant covenant to be responsible for keeping the property in a better condition than it was at the start of the lease, therefore, this could leave the tenant paying to fix issues that existed before the tenant occupied the property.

Correctly Reflects the Terms Agreed

It’s not unusual for verbal or email discussions with the landlord or agent to differ from what’s written in the lease. If it’s not in the contract, it’s not legally binding.

A solicitor can cross-check the lease against communications, ensuring nothing crucial has been omitted.

Termination and Break Options

It is particularly important in commercial leases where tenants may want flexibility if business needs shift, to understand how easy it is to terminate the lease and under what conditions, should circumstances change.

A solicitor can clarify the tenant’s options and advise on any pitfalls.

Conclusion

To conclude, reviewing a lease with a solicitor provides peace of mind. You will understand the terms of the lease, tenant obligations and covenants, and what to expect if problems arise. Fully understanding the terms of your lease reduces the risk of disputes between the parties, which can cause financial and emotional strain on any business and prevent major issues from arising. Having a solicitor review the lease ensures you understand your rights and responsibilities before you’re legally committed.

If you’re ready to sign a lease—or if you’ve already received one and feel unsure, please contact the Business Desk at Pepperells Solicitors, who are here to help and support your business needs.