The Importance of a Break Notice in Commercial Leases

A break notice or break clause is an essential part of any commercial lease, since it allows either the landlord or tenant to terminate the lease early. So far so simple. But making sure the break notice is worth the paper it’s written on? That’s where many commercial leases go wrong.

Why do you need a break clause?

The break clause can be one of the most difficult elements to negotiate in a commercial lease. Yet, there are clear benefits to both tenants and landlords. For the tenant, a break clause gives a certain amount of flexibility to react to market conditions – for example, by downsizing (or perhaps moving to a bigger space) as the business demands. It’s a much-needed safety net for tenants, particularly in unpredictable times like these.

And what about landlords? Surely they want to hang onto tenants for the full term of the lease? For the most part, that’s true. However, sometimes a landlord may want to redevelop or sell the property before the end of the lease. The break clause gives them that opportunity.

The potential pitfalls of a break clause

The idea behind the break clause may be simple, but the reality is often more complex than people expect. The courts deal with a surprising number of disputes over commercial lease break clauses – specifically, exercising a break clause to end a lease early.

In many of these cases, the break clause has been drafted in such an ambiguous way, it makes it difficult to exercise the clause in practice. Or sometimes the procedure for exercising the break clause hasn’t been properly followed, or certain conditions haven’t been met. Whatever the underlying reason, these disputes can be extremely costly.

Therefore, when you’re negotiating a new commercial lease, it pays to give your break clause plenty of attention, and seek specialist advice on whether it really protects your interests. It could save you a great deal of money and legal wrangling further down the line.

At Perry Hill Chartered Surveyors, we work with both tenants and landlords across London and the South East to agree unambiguous break clauses in commercial leases. From leisure and retail premises, to offices, industrial warehouses and mixed-use schemes, our team will ensure your commercial lease works for you. Talk to us about your commercial lease needs.

Why You Should Get a Pre-Building Schedule of Condition Report Before Commencing Building Work

When carrying out construction work on your property, there’s always a risk of damage to a neighbour’s property – especially in terraced and semi-detached properties. To help reduce liability and scope for neighbour disputes, it’s well worth investing in a pre-building Schedule of Condition report before work starts.

What is a Schedule of Condition?

The Schedule of Condition is essentially a building survey, but one designed to record the condition and defects of an adjoining property. It’s a forensically detailed report (including photographs) itemising the full condition of the neighbouring property pre-works.

Why document the condition of your neighbour’s property?

Because it reduces your risk in the long term. For example, if your neighbour files a claim for damages resulting from your building works, you’ll have a complete, independent record of their property’s condition before work started, and this will help to determine whether their claim has any grounds.

What sort of construction work are we talking about?

At Perry Hill, we recommend getting a Schedule of Condition report in advance of any building project that might impact neighbouring properties. This may include a rear extension, structural alterations, loft conversion or basement conversion. The report can be used for both residential and commercial properties.

Investing in peace of mind

Construction work can be stressful and disruptive. If there’s one thing you don’t need on top of that upheaval, it’s a dispute with the people next door. For you and your neighbour, the Schedule of Condition report provides important reassurance, because both parties know there’s a factual record of the adjoining property’s condition before work started.

Then, when the construction work is finished, a further inspection can be carried out, checking off against the Schedule of Condition report and confirming whether any damage or issues have arisen as a result of the works. It’s a sensible way to maintain good neighbour relations before, during and after a building project.

To find out how a pre-building Schedule of Condition can help ensure your construction work is a success, talk to Perry Hill. Our team of chartered surveyors can carry out all kinds of building inspections and reports, and provide trusted advice on the best way forward for your property.

Why use a building surveyor at the start and end of your commercial lease?

A building survey is not just for properties being sold. In fact, there are many reasons why you might appoint a surveyor to carry out a building survey or inspection on a rented commercial property.

Assessing the condition of the property

All commercial leases have clauses regarding the condition of the property, and how it should be maintained. This wording is designed to protect both landlords and tenants. But when it comes to enforcing these clauses, or ensuring a commercial property is being properly maintained, professional help is often needed.

This is where a trusted building surveyor is worth their weight in gold. They can carry out building surveys and other inspections, and provide detailed reports (including photos) on the condition of the property and any maintenance issues. With this in mind, having a building survey done at both the start and end of any lease is a good way to reduce risk and ensure peace of mind.

As well as a formal building survey, surveyors can also help with:

Schedule of Dilapidations – when a tenant has failed to properly maintain the property, this report outlines the items of disrepair and specifies the work needed to bring the property up to scratch.
Photographic Schedule of Condition – this document sets out the condition of the property in forensic detail, and covers the repair and maintenance obligations for the length of the lease, as agreed between the landlord and tenant.
Rent reviews – setting out the property’s current rental value, this report can be used to support lease negotiations and ensure the rent is set at the proper market rate.

Benefitting commercial landlords and tenants alike

Many commercial tenants choose to have a survey done before they take on a new lease because it can save them a lot of money in unexpected repairs. And for landlords, surveys and inspections are a vital way to protect their investment.

Ultimately, working with a professional surveyor means both sides can be sure the advice given is accurate and fair – which helps to promote positive communications and deepen trust between the landlord and tenant.

At Perry Hill Chartered Surveyors, we support both landlords and tenants with the full range of surveys, inspections and valuations. Discover how we can help you get the most out of your commercial lease agreement.

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