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Adam - Does your friend think he is going to be ripped off because the solicitor will charge him for drawing up the lease or licence, or does he just want something for nothing like buying a stock AST from a stationer?

The risk trying to arrange a lease "off the shelf" is that his property, the type of business taking on the tenancy, and the level of responsibility he will take on himself are unique and it would cost loads more than the solicitor will charge to unravel a poorly constructed lease/licence.

He needs to take professional guidance and work out exactly what terms he wishes to grant, how he wants to be paid (usually on quarter days), what responsibilities are his and re-billable to the tenant (e.g. buildings Insurance), the maintenance of the offices, right to assign, guarantors and so on.

Residential properties on AST's are so similar that an off the shelf approach does work here, but another factor is that if he wishes to finance the property the solicitors acting for the bank will check that the lease or licence is enforceable by them if they have to realise their security.

Dave Winter

Property Investment & Business Funding Solutions

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Hi Dave,

Thanks very much for your thoughts which I will forward on to my friend. He basically felt getting charged £500 for his sol to draw up a contract with one leasee was expensive enough, but then thought getting charged another £500 for a different leasee in another part of the building was taking the mickey. However, like you've made clear, it all boils down to keeping everything above board, especially with the finance company that lent on the property.

I will feed back his thoughts to this forum!

Cheers,

Adam

I cannot comment on the fees but they should relate to the work involved, worth shopping around on the back of recommendations received, but I would suspect that once the blueprint lease has been set up for the building (with this tenant) the costs on subsequent ones, if they are on comparable terms, should cost less.

Dave Winter

Property Investment & Business Funding Solutions

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The two things that stick out here Adam are the relatively short period of the lease ( 1 - 1.5 years as opp to a 5 year lease which in commercial is usually regarded as "shot term) and the lack of due diligence ( maybe your friend has covered this aspect which is why you haven't raised it). But I can't help but wonder what sort of business would only want to be in  a specific location for such a short period? It just all seems to favour the tenant.

 Regards

 RiKi

PS Forgot to mention. In commercial it's not unusual for the tenant to bear reasonable legal costs of both sides!

i have had a similar request from a prospective tenant. he is willing to go for a 10 yr lease, but is reluctant to pay solicitors costs etc. i had a lease drawn up by a solicitor for my existing tenant about 5 years ago, i was wondering if there would be any problem altering the existing lease by changing names /dates etc?

or is it not that simple?

moby:

i have had a similar request from a prospective tenant. he is willing to go for a 10 yr lease, but is reluctant to pay solicitors costs etc. i had a lease drawn up by a solicitor for my existing tenant about 5 years ago, i was wondering if there would be any problem altering the existing lease by changing names /dates etc?

or is it not that simple?

As the landlord you should use a commercial solicitor who is current in the laws for commercial property. There is no direct requirement for the other side to do so. If they want to take the risk that they do not understand the terms and conditions in the contract or the laws that apply behind the contract that is their problem. If they are not represented it might leave open the door to a later claim that they did not understand what they were signing. If you feel there is a real risk of that happening you could pay for their legal advice (a capped amount). Think of this as being insurance you are taking out against their future claims against you.

You can easily fund the cost of the legal advice through the rent and other charges the tenant is going to pay over the life of the contract.

John Corey