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COMMERCIAL LEASES LECTURE 4

Jennifer Slade. COMMERCIAL LEASES LECTURE 4. Commercial Leases: Lecture 4 Today’s topics. The Parties Habendum and Reddendum The Parcels clause. Commercial Leases: Lecture 4 The Parties. The Landlord Check title Bell v General Accident The Tenant Parents and subsidiaries Widget Ltd

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COMMERCIAL LEASES LECTURE 4

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  1. Jennifer Slade COMMERCIAL LEASESLECTURE 4

  2. Commercial Leases: Lecture 4Today’s topics • The Parties • Habendum and Reddendum • The Parcels clause

  3. Commercial Leases: Lecture 4The Parties • The Landlord • Check title • Bell v General Accident • The Tenant • Parents and subsidiaries • Widget Ltd • Widget (Holdings) Ltd • Widget (UK) Ltd • Widget plc

  4. Commercial Leases: Lecture 4The Parties • The Guarantor/Surety • Note: short-term security for L – a rent deposit • Consider for • Newly incorporated company • Subsidiary • Foreign company

  5. Commercial Leases: Lecture 4The Parties • Drafting • If L “gives time” in binding way, G will be released – so “g/tee to apply notwithstanding any time or indulgence granted by L to T… nor any neglect in enforcing the payment of rent and other covenants” • Variations to lease discharge G – if material and unless overridden in the lease or consented to by G • [ NB for former tenants - s18 LT(C)A 1995/Friends Provident – G not liable for increased amounts resulting from variation to lease that L could have refused (e.g. user widened increasing rent at review)] • T/G should argue for express provision re: variations

  6. Commercial Leases: Lecture 4The Parties • Disclaimer – see Hindcastle • Statutory continuation – liability of G does not continue during holding over under LTA 1954, unless provided for in lease. • L will want T’s covenant to provide replacement G – e.g. if G becomes insolvent

  7. Commercial Leases: Lecture 4The Parties • Assignment issues • Providing G may be condition of assignment • G may want to be able to call for an assignment if T defaults • In old lease G of OT may be on the hook for the term • In new lease, if T assigns and enters into an AGA, what is the position for the G of T – still on the hook? • Advice to guarantor on drafting

  8. Commercial Leases: Lecture 4Habendum and Reddendum • Demise and Rent • Term • Certainty • Rent Commencement Date, Term Commencement Date, Date of Grant • SDLT implications • When does a lease start for SDLT? (note effect of 5-year rent review rules)

  9. Commercial Leases: Lecture 4Habendum and Reddendum • Break clauses • Rationale for L and T • Time of the essence – note possible influence of coincident rent review • Notice procedure – note interaction for L’s break with LTA 1954 for tenancies within the Act • Mannai v Eagle Star • Notice referred to 12 January instead of 13 January • Conditional on compliance with covenants • T must comply strictly – so T to try to negotiate out conditions? (use of “reasonable”/”material” can create uncertainty)

  10. Commercial Leases: Lecture 4The Parcels Clause • Lease of whole/external demise • Lease of part/internal demise • Plans – note HMLR guidance • Boundaries and eggshells • Rights and reservations

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