Premises issues

[rich998]

Hi all. I've got a problem relating to the property I use for my Limited Company.

3 years ago I agreed to a 5 year lease on a unit. Then last November I took on the adjacent unit, but as things have contracted recently I needed to move out of at least one of the units. However, the landlord is telling me I can't and he is expecting me to front around 30,000 for rent up to the end of the 5 year lease.

Now, we originally agreed and signed a 'Heads of agreement' basically outlining some terms which should be put into a lease contract. This lease has never existed to my knowledge and certainly has never been signed.

What is the position I'm now in? Can I just close both units and move on, or am I liable to have problems now?

 

[kulture]

I would go see a solicior. In the absense of a lease, the landlord will have a difficulty in enforcing a full 5 year term. BUT your statement "3 years ago I agreed to a 5 year lease on a unit" may give him a slight chance. What, if anything, did you agree on the unit you took in November.

 

[rich998]

My understanding was that a legal document outlining the overall lease in detail would be drawn up. This (despite asking for it in the past) has never appeared.

I've seen a solicitor specialising in commercial landlord and tenants and she says that the later unit heads of agreement are very sketchy, and that depending on the day, a court should not support the heads of agreement on the original unit.

The second unit I took - the heads of agreement said that the lease due to be signed would be terminated at the same time as the original unit - June 2014.

Really, I'm in a position where I could rescue the company provided we had some support from the landlord in letting us dispose of one of the units. However, with this situation, I will have no option but to close the business.

 

[Maxwell83]

Is there a lease signed on the first unit but not the second?

Have you taken occupation of the second and started paying rent?

 

[rich998]

There is no lease for the first or second unit. Just a signed Heads of Agreement.

The second unit was moved into in November 2011 and yes, rent has been paid as outlined in the heads of agreement and is up-to-date.

 

[DDAFIRE]

However, with this situation, I will have no option but to close the business.

I don't know about the legal side, but have you told the landlord this?

If so, with the amount of vacant properties at the moment it seems strange that he wont budge on it.

I would have thought that faced with the prospect of you liquidating the company and him potentially ending up with 2 vacant properties that he would need to find new tenants for (and also maintain in the mean time), that he would at least offer you a period rent free on the 2nd one until you get back on your feet?

 

[Maxwell83]

There is no lease for the first or second unit. Just a signed Heads of Agreement.

The second unit was moved into in November 2011 and yes, rent has been paid as outlined in the heads of agreement and is up-to-date.

Do the HOT's state "subject to contract" or similar?

 

[rich998]

The actual nitty-gritty of the Heads of Agreement state:

'...under the following terms and conditions to be contained in a jointly-signed formal lease as soon as practicable'

That's all really other than laying out the terms (most of which are now irrelevant due to being over 3 years old.

They don't state 'subject to contract'.

 

[rich998]

I don't know about the legal side, but have you told the landlord this?

If so, with the amount of vacant properties at the moment it seems strange that he wont budge on it.

I would have thought that faced with the prospect of you liquidating the company and him potentially ending up with 2 vacant properties that he would need to find new tenants for (and also maintain in the mean time), that he would at least offer you a period rent free on the 2nd one until you get back on your feet?

Having moved into 2 shell units, I've spent around 5k in electrics and alarm systems. He has asked that these get removed when we go...

 

[Maxwell83]

The actual nitty-gritty of the Heads of Agreement state:

'...under the following terms and conditions to be contained in a jointly-signed formal lease as soon as practicable'

That's all really other than laying out the terms (most of which are now irrelevant due to being over 3 years old.

They don't state 'subject to contract'.

It amounts to the same thing I think - it basically means that there was no intention to be bound by the HOTs, you both intended for there to be lease to reflect the HOTs which you would ultimately be bound by. The HOTs themselves would not be binding - they were merely a gesture of intention to be bound by a future lease (which never materialised).

So, having never got to the formal lease stage, he cannot hold you to the terms that would have been contained in that lease.

If it went to court and I had to guess the outcome, i would think that you are currently on a periodic tenancy, which you can determine when you want giving the requisite notice. I wouldn't think any judge would hold those HOT's as binding against you.

Your practical problem is if you upset him by leaving one unit, but stay in the other - how will it affect your landlord/tenant relationship?

 

[rich998]

That's pretty much how I see it. Thanks for this.

 

[jules12345]

Of course there is a lease or license if you have paid rent - the question is what type of lease and whether the heads of agreement determine specific terms of any lease to which you may be bound.

Firstly a question or two -

Did you pay rent on the first and second property and how regularly...?

Regards
Jules

 

[Maxwell83]

Of course there is a lease or license if you have paid rent - the question is what type of lease and whether the heads of agreement determine specific terms of any lease to which you may be bound.

Firstly a question or two -

Did you pay rent on the first and second property and how regularly...?

Regards
Jules

There is no lease or licence - why do you say there is?

Are you thinking that there must be a 'tenancy'?

 

[jules12345]

It amounts to the same thing I think - it basically means that there was no intention to be bound by the HOTs, you both intended for there to be lease to reflect the HOTs which you would ultimately be bound by. The HOTs themselves would not be binding - they were merely a gesture of intention to be bound by a future lease (which never materialised).

So, having never got to the formal lease stage, he cannot hold you to the terms that would have been contained in that lease,
If it went to court and I had to guess the outcome, i would think that you are currently on a periodic tenancy, which you can determine when you want giving the requisite notice. I wouldn't think any judge would hold those HOT's as binding against you.

Your practical problem is if you upset him by leaving one unit, but stay in the other - how will it affect your landlord/tenant relationship?

I agree with the poster in regards to the periodic tenancy, but it may be arguable that in adhering to the HOA''s at the outset the tenant was bound by the terms therein by specific performance of the terms - certainly on the first premises.

IE - Thou shalt pay your rent yearly in one lump sum on the 1st april every year for five years after which another agreement shall be sought etc etc. This term to be included in the forthcoming lease.

In adhering to this term it may be arguable that you agreed to such a term and as such are bound by such a term regardless of whether or not a periodic tenancy.

regards
Jules

 

[rich998]

I pay rent every month. It is paid through my on-line banking towards the end of the month.

Really, I agreed to the Heads of Agreement back in mid 2009, and I even insisted on a break clause after 2 years (we're presently at 3 years 3 months). There was no detail in the Heads of Agreement about this, only that a break was available after 2 years. The later unit was due to expire at the same time as the original, whenever this may be.

As there was never any detail, as a deed was never drawn up, can I use this to move out of the unit.

If I have created a legally binding contract by paying rent, can I take any action against the landlord in terms of never receiving a deed to agree to with a solicitor and sign, or any of the other agreements which he has not adhered to, such as the promise of CCTV, maintaining the estate etc...

 

[jules12345]

You can consier that there is a lease and that a court would see that one existed although a periodic tenancy. (to Maxwell --> which is a lease..! IE periodic tenancy AGREEMENT (by performance))

Your bound by the terms within a periodic tenancy of your payments - if you pay monthly you need only give a months notice.

If there is no written lease it doesnt mean to ay that there is no lease. a lease can be determined by paying the rent. In your case almost certainly a periodic tenancy IMHO - and that is what your sol is most probably referring to in regards to the iffyness of the HOA's ie being substantial enough to determine a full lease etc etc.

Although not a sol and as such check with one - my advice would be to determine 'merely' a periodic tenancy and act accordingly. Suggest to your landlord such and that by law your only bound to give notice akin to the payment of rent in your case one month. You would still of course be bound by certain cleaning and damage regulations most probably as it is the norm, so make sure everything is clean and tidy etc when you leave get evidence to highlight that there is no damage - pictures etc if possible. But really your LL shouldn't really have a problem with you leaving. They may raise a claim but I tend to agree with your sol that its very iffy as to whether or not the grounds of the HOA's are substantial enough to determine the terms of the tenancy. Speak to your sol and see if they agree with this of course, maybe get her/him to write a letter to your LL stipulating your position and that you intend to leave with a months notice - offer any deposit you may have left to offset that months rent.

A license would be determined if you didn't have absolute possession which I'm presuming you did, so it is a lease not a license.

Regards
Jules

 

[Maxwell83]

You can consier that there is a lease and that a court would see that one existed although a periodic tenancy. (to Maxwell --> which is a lease..! IE periodic tenancy AGREEMENT (by performance))

Are you saying that 'tenancy' and 'lease' are interchangeable terms? That is wholly incorrect.

I think you will find that a tenancy is not a lease. You can have a tenancy where there is no lease.

A periodic tenancy exists where there is a landlord/tenant relationship but not a lease.

Your judgement of the situation I agree with, but your terminology is incorrect.

Do you practice law at all?

 

[rich998]

Just as mentioned, the solicitor has been instructed and she is now helping me.

According to her, we just have a pay as you go type agreement. I've given my landlord a confirmation letter that the company is intending to move and will pay rent up to the month we leave, and the unit will be returned to its original condition (i.e. a dark shell).

 

[rich998]

OK then; a few days on now and things are really heating up!

Landlord has just sent me a letter telling me he intends to serve bankruptcy on me on 25th this month, based on something to do with The Property Act 1925, Section 40. Now I've had a poke around on Google (obviously now making me QC level ) and this has nothing to do at all with the situation we are in.

Firstly, I read this as being relevant to land sales (not leasing a unit)

Secondly, this relates to something NOT prior to the 27 September 1989 cut off date.

I know the landlord is close to bankruptcy himself, and I feel he is intimidating me in order to extract 30k in rent which we have never signed a deed/lease on.

My solicitor is on leave this week, but I have already copied the letter from the landlord via email, as with all communication exchanged between us.

Anyone else for a can of stress??

Forgot to mention, the rent is all paid up to the end of this month!