Legal Advice in Coventry from Varley Hibbs | Varley Hibbs

Break Options for Commercial Property

In the current economic climate, the exercise of break options and the inclusion of break clauses in leases are becoming more common. The right to break may arise on one or more specified dates or it may be exercisable at any time during the term of the lease on a rolling basis. The conditions attached to a break clause must be strictly performed and, in particular, time will be of the essence in respect of any time limits in the break clause.

Tenants should seek advice before serving a break notice. It is essential that every aspect of the break procedure is correct as some mistakes could be very costly. Some points to bear in mind are:-

• Which tenant can exercise the break option?
• Who should be served with the break notice and how should it be served?
• Which are the relevant dates for exercising the break right?
• What should be done to comply with conditions of the break option?

The wording of the break clause is important and both landlords and tenants need to consider the wording carefully prior to completion of the lease.

For further legal advice, please contact Sarbjit Nahl
Telephone: 024 7649 3440
Email: skn@varleyhibbs.com|
Click here to view Sarbjit Nahl’s profile »

Commercial Rent Arrears

When tenants fall into arrears, there are a number of options available to landlords depending on the circumstances and whether the tenant is an individual or a corporate tenant. Amongst those available are:

• Court proceedings – it is normally only worthwhile to sue if the tenant has assets against which a judgment can be enforced. The landlord may also be prevented from taking action against an insolvent tenant for example, due to the moratorium in the case of an administration
• Serve a statutory demand or a winding up petition to persuade the tenant to make payment or run the risk of being made bankrupt or wound up, as appropriate
• Distress – at the time of writing, the landlord can still seize goods that belong to the tenant in payment of debt without court proceedings although there are rules about what can and cannot be seized. However this remedy will be replaced by the new remedy of Commercial Rent Arrears Recovery - watch this page for details of implementation
• Is anyone else liable – the most common options are to claim against a guarantor, draw down on a rent deposit, pursue former tenants and/or their guarantors, serve a rent diversion notice on subtenants
• Forfeiture – this would put an end to the lease, subject to rights of relief. If the tenant wants to keep the property, it will normally be required to pay the arrears

For further legal advice, please contact Sarbjit Nahl
Telephone: 024 7649 3440
Email: skn@varleyhibbs.com|
Click here to view Sarbjit Nahl’s profile »