The end of the lease is nigh...
Comments |
by Richard Metcalfe, of Metcalfe Stanley
Everyone who leases commercial property large or small, old or
new, must understand this basic fact: Unless you take appropriate
steps before signing the lease, you will be responsible for
repairing the property before you leave, regardless of its
condition when you first occupy it.
Many leaseholders do not understand this and are faced with
substantial and unwelcome costs at the end of their lease.
For example, a 30,000 sq ft warehouse which was
weathertight at the start of a 15-year lease may
require a new roof at the end of the lease at a cost of £140,000.
In the vast majority of cases this is the responsibility of the
outgoing leaseholder who must either arrange for the work to be
done or pay the landlord a sum of money in compensation.
Getting the work done inevitably is disruptive to the
leaseholder's business and means he must vacate the building early.
Negotiating a financial sum with the landlord is full of
uncertainty and can involve substantial legal costs.
Chartered building surveyors are experienced in working with
legal advisors to negotiate the pitfalls of this area of the law,
ensuring that their clients, be they landlords or leaseholders,
respectively maximise their gains or minimise their losses when
buildings are being vacated.
Many clients believe that because they are leasing a building
they do not really need a building survey as they would if they
were purchasing a freehold property.
This is a dangerous misconception as it is vital before signing
any commercial lease to obtain proper professional advice in order
to understand and quantify the liabilities which your organisation
is taking on. In this way the cost effectiveness of the lease can
be assessed at the outset and contingencies made so that there are
no unexpected exit costs at the end of the lease.
If you are a landlord, as a lease comes towards its end always
take appropriate legal advice and also advice from a chartered
building surveyor at an early stage. You should have your Schedule
of Dilapidations prepared and served on the lessee in good time and
in sufficient detail by an experienced chartered building surveyor
practitioner.
If you are the prospective leaseholder consult your chartered
building surveyor before you sign the lease and then again in the
last year of the lease to plan your exit strategy in the most
efficient way; do not wait until you receive a Schedule of
Dilapidations from your landlord.
Tuesday, February 16 2010
The KM Group does not moderate comments.
Please click here for our house rules.