As commercial property solicitors we often advise our tenant clients to consider having a break clause in their lease. This is particularly important when the lease is long, or when a client is starting up a new business and is not sure what their future property requirements may be. We understand that flexibility is very important when taking bricks and mortar premises for any kind of business.
However, as with so many legal things, the devil is in the detail. The agreed Heads of Terms probably just say “5 and 10 year Tenant only break option”. However, in the lease itself the break clause can run to many paragraphs of requirements that must be complied with to successfully break.
One of the key things to be aware of is whether or not you have to give “vacant possession” when terminating your lease. You may think that just moving out is enough? Unfortunately it’s not as simple as that. Vacant possession is a phrase which has never been clearly legally defined.
How vacant is vacant? Would you consider any or all of the following people or things remaining in a property to be vacant possession?
- Workmen and security measures related to moving out
- Unauthorized Trespassers/squatters
- Employees
- Desks and chairs
- Old stock
- Demountable Partitioning
- Filing cabinets
- A snooker table
The answer is that all of these could, and have, been considered not to be giving vacant possession. This meant that the tenants were on the hook for the rent and other obligations for the whole of the remainder of the lease.
What vacant possession means in practice will depend upon the particular circumstances of the case, but a High Court judgement this summer seems to indicate that judges are taking a hard line, and tenants need to be extra careful to understand their obligations and responsibilities.
The Commercial Property team at Amphlett Lissimore can help. If you are taking or granting a new lease we can negotiate the best terms possible. We can help you to understand what your obligations are when you want to leave your premises. Please call our Commercial Property Team on 020 8768 6860 for advice, or email us on commercial@allaw.co.uk.