Commercial Lease agreement

[Warnie]

Hi,

I'm a sole trader and I'm renting a commercial unit in which the final payment is due at the end of march for the last 3 months,as I am exercising a 12 month break in the agreement. However as I am slowley winding up the business, as it is losing money every week I'm not going to be able to raise the funds.

My question is, as the unit is empty as most of my stock has been sold, what kind of lengths can the owners go to, to collect the last payment, and do you think they would bother too much due to the costs involved?

The amount of the last payment is £1800

Thanks

[ClassicMercs]

Warnie said:

Hi,

I'm a sole trader and I'm renting a commercial unit in which the final payment is due at the end of march for the last 3 months,as I am exercising a 12 month break in the agreement. However as I am slowley winding up the business, as it is losing money every week I'm not going to be able to raise the funds.

My question is, as the unit is empty as most of my stock has been sold, what kind of lengths can the owners go to, to collect the last payment, and do you think they would bother too much due to the costs involved?

The amount of the last payment is £1800

Thanks

£1800 is worth chasing for.

You are a sole trader - therefore you own assets are the same as your business assets. Your own house etc - whatever you have.

Also, look at the terms of the lease - as you have for the 12 month break. Are there extra penalties for not paying / paying on time.

And never mind the rent - are there terms relating to dilapidations on exit. If there are - sorry. You have problems.

However, if there is nothing in the terms about anything its up to you if you decide not to pay. Worst case is that you may hold onto the cash a bit longer than if you paid on time.

[davidjpowell]

Many break clauses are conditional on complying with the terms of the lease. If you don't pay the rent then you are not complying and risk invalidating your break. Read and check it very carefully.

Also consider dilapidation's A) as part as the above, if conditional on observing terms of lease you could invalidate break and B) Landlord might well chase you and depending on repairing covenant take you to cleaners....

[Warnie]

Thankyou, so it looks as though if I can't raise the cash in time it will invalidate the break clause, and I will be liable for another 2 years?

[davidjpowell]

it depends on the exact wording of your break clause. Post it up or PM if you prefer.

[Davel]

Maybe a daft question but how well do you get on with the Landlord?

One of my tenants had a similar problem in that he rented 10,000 sq.ft in two linked warehouses.

He came to see me and was totally open about it and told me that he couldn't afford the rent on that much space.

I had another use for 5,000 sq.ft and so we took it back in hand off him.

No one lost out and the guy is still on site here.

I realsie that you are struggling but not all Landlords are unreasonable and you can't pay what do don't have.

It would be a bloody shame if your home was at risk so take advice and, depending upon the terms of your lease, you may need a photographic survey of the unit showing any issues.

In an ideal world, you do this at the start and end of any lease to ensure that you weren't leaving the place in a better state than it was when you entered it.

Good luck!