commercial lease advice

[mickytruelove]

looking for some advice regarding a commercial lease.

A bit of context, i run a company and have been in a business unit for 6 years but have no official lease as the landlord works next door and always been a relaxed way of doing things.

Now the company has grown we are needing a new building with more space. One has came up and we have roughly agreed head of terms with the estate agent/land lord and have been trying to get advice on what things we should or should not agree too. This sounds simple enough but after spending the week phoning every local estate agent/Solicitor in my area every one of them are too busy.

There is really only one thing on the head of terms that makes me want advice and it is that the two company directors will be guarantors, no other info and as such probably uncapped and i have no idea how bad this could be if things went south in the future.


So really two questions.

1) what should i be looking out for in head of terms, or give it to a solicitor to deal with?

2) If i cannot find someone local to help are online solicitors any use, or is there anyone on here that could help?

Property is in Scotland if law is a bit different.

[Jockman]

The cap will be the terms of the lease ie quarterly payments and duration.

I’ve never seen an uncapped one.

[FazerBoy]

Jockman said:

The cap will be the terms of the lease ie quarterly payments and duration.

I’ve never seen an uncapped one.

It will include all liabilities under the lease including repairing obligations and dilapidations.

You would be better advised to offer a rent deposit, if the landlord will accept that instead of personal guarantees...

[Dixy]

If your company has been trading profitably for 6+ years and you have paid your bills promptly then object to the directors guarantee. You have the whip handle at present as there are certainly more landlords than willing and able tenants. I would strongly advise you to get professional face to face advice even if it delays the move, commercial leases are still one of the few areas where a landlord has some power.
Said as a commercial landlord.

[anonymous-user]

Dixy said:

If your company has been trading profitably for 6+ years and you have paid your bills promptly then object to the directors guarantee. You have the whip handle at present as there are certainly more landlords than willing and able tenants. I would strongly advise you to get professional face to face advice even if it delays the move, commercial leases are still one of the few areas where a landlord has some power.
Said as a commercial landlord.

I agree entirely with this.

I am both a commercial landlord and someone who deals with leases in their day job.

Firstly, inform the agent/landlord for the new property that you are currently a trading/profitable company and would not entertain the lease containing any form of directors guarantee. The liability of the entity of the lease must fall on your Ltd Co. If they feel they can proceed on that basis, then that is one hurdle out of the way.

If they won't budge on that point, tell them you aren't interested, and start looking for alternative premises.

Make sure you involve a legal professional in this process to ensure you fully understand what you and your Ltd Co are agreeing to and signing up to.

[steve2]

For me this is an interesting thread and good luck to the op, as I don’t want to derail the thread I will start a new one but I would appreciate some comments from some of the responders on here
Thanks

[Rockatansky]

It was a few years ago, but I had excellent advice & service from Vanessa Beattie in relation to a commercial lease (assignment / sub let).

She's moved to a different firm it seems, details below..

https://www.lindsays.co.uk/our-people/vanessa-beat...

[soxboy]

Dixy said:

If your company has been trading profitably for 6+ years and you have paid your bills promptly then object to the directors guarantee. You have the whip handle at present as there are certainly more landlords than willing and able tenants. I would strongly advise you to get professional face to face advice even if it delays the move, commercial leases are still one of the few areas where a landlord has some power.
Said as a commercial landlord.

If it's an industrial unit then at the moment the landlord still very much has the upper hand due to shortage of units (said as a commercial valuation surveyor).

If the property is in Scotland then you will need a lawyer practicing in Scotland.

[Keep it stiff]

As pointed out, Scotland is a different ball game. Also as pointed out, you need advice.

You do not need a local solicitor for a local transaction. I suggest you cast your net more widely.

[TwistingMyMelon]

Some good advice

I would really recommend using a decent solicitor as Commercial leases can be a minefield and its possible to learn some hard lessons

[mickytruelove]

Thanks for the advice, Always helpful.

As an update I have a local Solicitor onside now and the Landlord is happy to concede the personal liability if we provide the last 3 years accounts which is no problem.

The only thing i have decided on which might be a bit strange is we have added a Schedule of Condition for the lease and paying a surveyor to prepare this. I think it will just remove any problems in the future.

[Wombat3]

mickytruelove said:

Thanks for the advice, Always helpful.

As an update I have a local Solicitor onside now and the Landlord is happy to concede the personal liability if we provide the last 3 years accounts which is no problem.

The only thing i have decided on which might be a bit strange is we have added a Schedule of Condition for the lease and paying a surveyor to prepare this. I think it will just remove any problems in the future.

Not strange at all, we have always done this. Doesn't have to be anything more complicated than a lot of photographs & a brief description compiled into a PDF doc. Take a picture of ANYTHING that is not 100% from flaking paint onwards. It may save you a whole heap of trouble and an argument at some point.

Make sure you understand your liabilities especially vis a vis a full repairing lease (which is frankly usurious IMO, but seemingly very common).

[fridaypassion]

Wombat3 said:

Not strange at all, we have always done this. Doesn't have to be anything more complicated than a lot of photographs & a brief description compiled into a PDF doc. Take a picture of ANYTHING that is not 100% from flaking paint onwards. It may save you a whole heap of trouble and an argument at some point.

Make sure you understand your liabilities especially vis a vis a full repairing lease (which is frankly usurious IMO, but seemingly very common).

Very sound advice. Your dilapidatuons commitments should be limited in specific wording in the lease not using ambiguous terms such as "suitable condition"

A schedule of condition is meaningless without a tightening up of the wording around this aspect of the lease.

[MrC986]

OP, are you happy with the condition of the new building? Does it need any repairs including to things like the electrics? - If you aren’t then you need to flag this with the landlord and must get the work done before you sign the lease. Your surveyor should not only take the relevant pictures as part of their inspection (make sure they also look at the roof, gutters and parking/loading areas etc. properly) but also suggest a list of certification you should request I.e. Asbestos schedule, fixed wire electrical test info etc. etc.

If you plan on making any substantial alterations or want to add signage to the building, include this in the legal process and get landlords consent as it is costly/time consuming once you signed the lease in comparison and finally check whether any service charge is payable, what it’s for and what the last 3 yrs expenditure has been and if there are any planned major expenditure items.