Commercial Lease Change Of Ownership

Businesses need premises from which to operate and occupy their premises in line with the terms of their commercial lease. As such, the arrangement between a landlord and tenant can be considered to be a mutually beneficial one. However, a landlord’s circumstances may change during the tenancy and he or she may decide to sell the property. In this article, commercial lease change of ownership, we take a look at the implications of this and the process and mechanism involved.

Free Initial Telephone Discussion

For a free initial discussion on how we can advise you on your legal rights when your landlord sells the property, you have a lease on, get in touch with us today. We will review your situation and discuss the options open to you in a clear and approachable manner. Early expert legal assistance can help avoid the stress of dealing with these issues on your own. Simply call us on 0345 901 0445 or complete our online enquiry form and a member of the team will get back to you.

What are the implications of a change of ownership on my commercial lease?

Your landlord’s interest will be sold subject to any existing leases, which means that the buyer will inherit you as a tenant and become your new landlord. Consequently, nothing will happen to your tenancy during the term of your lease.

If you have a lease that is protected by the Landlord and Tenant Act 1954, and which therefore gives you a right to request a new lease at the end of your contractual term with only limited grounds on which such a request can be refused, the implications of a sale by your landlord will depend on what the new owner intends to do with the premises.

If they intend to occupy the premises themselves or to demolish and redevelop the premises, then they will be entitled to refuse your request for a new lease and to bring your tenancy to an end. However, to do this your new landlord will still have to comply with the statutory procedure set out in the 1954 Act to obtain vacant possession.

If your landlord has informed you that he intends to sell the property, it would be prudent to establish what the new owner intends to do with the property. He may well be quite happy for you to remain as a tenant. If you discover that the new landlord intends to regain possession under the 1954 act, it is important that you seek legal advice and we can guide you through this process.

Remember, your new landlord will be under an obligation to give you notice of completion of the sale confirming the buyer’s name, their contact details and their bank details for payment of rent and any other sums due under your lease. In this way, you will be fully aware if the building has been sold

Will the landlord’s obligations change after the change of ownership?

If your lease was granted on or after 1 January 1996 your landlord will remain liable for their obligations to you under your lease even after they have sold their interest in the premises. However, there are certain circumstances when this doesn’t apply. These can include:

• If the landlord negotiates a release from liability with you
• If there is a provision in the lease which excludes liability following a sale of their interest
• If you agree to a release under the statutory procedure for release set out in the Landlord and Tenant (Covenants) Act 1995.

Whether a lease contains an exclusion of liability clause will depend on what was agreed when your lease was originally granted. If you have taken an assignment of your lease you will need to check the terms to establish if your landlord’s liability has already been expressly excluded following the sale of the reversionary interest.

Your main considerations where a landlord has excluded liability in the lease are where they have obligations to repair or to provide services. Your new landlord will inherit these obligations, and any breaches, and where a new landlord has little or no financial substance this may impact upon you. Such a provision may also have an impact on the commercial value of your lease and the marketability to other tenants if you decide to assign your lease.

Unless a release is granted or obtained, your original landlord will remain liable for the performance of the landlord’s obligations following the sale. This means that the original landlord and any new landlord will have joint and several liability to you.

If your lease was granted before 1 January 1996 the position is different. The original landlord will remain liable for the landlord’s obligations throughout the term of the lease and cannot avoid liability by including an exclusion clause in the lease. A new landlord who acquires the property on a subsequent transfer will only be liable during their time of ownership. Upon sale of their interest, their liability will come to an end.

How We Can Help

Our team is well versed in dealing with all the various aspects of commercial property law and we are here to help in any way we can. We are able to explain clearly the legal issues and provide open, honest and professional advice.

How to Contact our Commercial Property Solicitors

It is important for you to be well informed about the issues and obstacles you are facing. However, expert legal support is crucial in terms of reducing risk, saving you money and ensuring you achieve a positive outcome.

To speak to our Commercial Property solicitors today, simply call us on 0345 901 0445, or allow a member of the team to get back to you by filling in our online enquiry form. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.

Authored by Ben Posted in Commercial Property, News Tagged as