Landlord and Tenant – an area of property law that, with professional support, needn’t be a hassle or a burden. But understanding your responsibilities as a landlord or as a tenant will play a crucial part in how simple that role truly is.
We spoke to our resident property experts and partners at Prosperity Law, Karen Piontek and Paul Magee, who offered a little bit of insight into the intricacies of advising Landlords and Tenants. As Prosperity Law’s Head of Commercial Real Estate, Karen represents a variety of commercial clients across all aspects of property law, focusing on the proactive protection of her clients’ properties, portfolios, and rights.
Paul Magee is Prosperity Law’s Head of Dispute Resolution for Commercial Property and Contested Probate. Our in-house expert when it comes to litigation for property cases – Paul steps in for Prosperity’s property clients in the case of contentious disputes.
Between both Karen, Paul, and the wider Real Estate team we can represent property clients across the full suite of legal services, from proactive provisions through to dispute resolution. Here’s what they had to say on some of the most commonly received property enquiries.
Taking out a lease
Whether owner or tenant, commercial property or residential property, it all begins with the establishment of a lease. It’s a contract that sets out the arrangement between landlord and tenant, including the terms of how the property might be used, length of tenancy, and things like payment arrangements. These are the basics. But in fact, the lease itself can be an incredibly useful tool in protecting yourself, given that it firmly outlines the expectations and obligations of each party.
If you’re a Landlord – it’s your responsibility to draft the initial lease. And using a professional, and experienced legal partner to do so is vitally important. Karen said:
“A well-drafted and detailed lease for a commercial or residential property is an important protection for landlords – and one that can save you lots of time and money in the long run. For developers and owners who are dealing with multiple properties at once, it might be tempting to repurpose an existing lease, or for those inexperienced in these transactions, it might be tempting to download an online template. By doing either of these things, you could leave yourself vulnerable to future issues and costly mistakes (many of which we’ll discuss later in this article).
The last thing you want is to end up in a lease dispute with a tenant. Litigation is costly – and all of a sudden appointing a legal professional to draft a lease, seems like a small price by comparison.
Similarly for tenants of commercial properties, always have your lease checked by a legal professional. The contract should be acceptable and agreed by both parties – which will make everyone’s lives easier throughout the period of your tenancy.”
Karen Piontek, Partner and Head of Commercial Real Estate
Break notices
Just one example of why it’s important to have your lease drafted by an appropriate legal professional, is the inclusion of a break notice. Simply put, a break notice is a clause included in the lease that allows either the landlord, the tenant, or both, to terminate the agreement before the expiry date.
The break notice is usually accompanied by a list of provisions, which are essentially conditions that must be met before either party can serve the notice. And within these conditions often lie the ambiguities that might rear their heads in a dispute and eventual litigation. Paul commented:
“The provisions surrounding a break notice are vital when it comes to the success of enacting the notice – whether you’re a landlord or a tenant. These provisions might list how the notice should be served, where it’s to be sent, how much notice is required and a range of other conditions, such as various insurances being in place. If even one of these conditions isn’t met, the validity of the clause can be contested, and the enacting party held to the lease terms.
The majority of our enquiries regarding break notices come from commercial tenants who find themselves in such a position. This highlights the importance of both appointing a competent professional in the first instance, before signing any lease and speaking to a solicitor with relevant experience of break notices, before you try to enact one.”
Paul Magee, Partner and Head of Dispute Resolution
Where some tenants may invoke the use of a break notice in an attempt to create leverage in fee negotiations – they must also bear in mind that once notice is served it cannot be revoked and if the landlord agrees, the tenant must prepare to leave the property by the agreed date.
Forfeiture of lease
From the landlord’s perspective, If the tenant has breached the terms of the lease (whether in relation to unpaid rent, mistreatment of the property, or other wider breach of contract) forfeiture can be used to regain possession of the property in question, against the tenant’s wishes. For many, this is a last resort but one that is the right of the landlord invariably protected by the Lease.
Before forfeiture is considered, a number of actions might be carried out. Including:
- Securing certainty that the landlord has the legal right to do so, usually obtained through an express right which might look like a forfeiture clause or a proviso for re-entry in the lease.
- Provide notice and detail of the breach.
- Give the tenant ample chance and time to remedy the breach (in many cases this is preferable).
- Give the tenant the opportunity to monetarily recompense for the breach.
If the tenant fails to complete the above actions, the landlord can pursue forfeiture. There are two ways that forfeiture can be carried out and depend entirely on the circumstances of each case. Paul said:
“Whilst it’s a last resort for many, there are cases where forfeiture is entirely necessary to protect the landlord – especially in cases of unpaid rent.
Forfeiture by peaceable re-entry takes physical repossession of the property by entering and changing the locks, where forfeiture by court proceedings involves applying to the court to seek possession of the property. In both cases, you must work with an experienced solicitor to thoroughly understand your rights and ensure that all necessary actions have been taken in the lead up to this point. Mistakes made by the unwary can be very costly indeed and an experienced litigator can bring considerable value in helping to avoid the pitfalls.
Without fully understanding the process and your rights, you could be liable in damages (compensation)associated with trespassing. The tenant retains the right to apply for relief from forfeiture, which, if evidenced correctly (depending on the circumstances), will usually be decided in favour of the tenant (subject to rectification of the breach of covenant and adverse costs). Also note that in these proceedings conduct will also often be taken into account – a fact which should kept front of mind throughout any attempt at forfeiture.”
Paul Magee, Partner and Head of Dispute Resolution
Dilapidations
A terminal dilapidations claim can present at the end of a lease, and essentially it happens when the tenant has breached the contract in relation to the state of the property, upon it being handed back over to the landlord. Common dilapidations might include general disrepair to the building, fixtures, and general physical state, as well as more cosmetic elements like decoration.
From a tenant’s perspective, such claims can be costly and similarly for Landlords, if a property is left unfit tore-let to a new tenant. It’s in both parties’ interests to avoid these circumstances. Karen said:
“Again, we find ourselves looking at an area of property dispute which could sometimes be resolved through thorough investigation and competent drafting of the initial lease. Proactive guidance for Landlords might include specifically detailing the physical and superficial condition the property should be left in at the end of a lease, checking at regular points throughout the lease term if repairs and maintenance has been carried out, even agreeing a particular maintenance programme with your tenant at the beginning of the lease.
For tenants, you want to ensure you’re comfortable with the potential liability risks you’re taking on and fully aware of all responsibilities – not just for repairs and maintenance – but also for things like cleaning and decoration, and record the property’s state of repair at the outset of the lease.
Tenants should also be aware that whilst Insurance products are now available to cover dilapidations claims, they’re not always and absolutely effective. As with most insurance policies, the devil is in the detail, and assuming you are comprehensively covered against any and every claim can be an expensive mistake to make.”
Karen Piontek, Partner and Head of Commercial Property
From the areas examined, it’s clear that when it comes to the leasing of property, the more prepared you are the better. And in commercial cases, qualified and experienced real-estate solicitor and property litigator are worth their weight in gold. The nuances of property transactions are varied, the disputes complex, and having dual expertise on your side – whether landlord or tenant – can make all the difference.
For a free and confidential 30-minute discussion with our specialist teams please get in touch with Karren in real estate on karen.piontek@prosperitylaw.com or in property litigation Paul on paul.magee@prosperitylaw.com.
