Terminating commercial lease when landlord is breaching contract

[marie44]

Hi, can I terminate my commercial lease if the landlord is in breach of contract? Not repairing numerous roof leaks and ignoring emails, I have requested to end the contract and leave but they refuse and are asking for the remaining term of the lease to be paid in full, a further 18 mths. We are a bakery and have a small seating area of 4 tables, so for health and hygiene reasons have had to close some of the seating, resulting in loss of earnings any advice would be greatly appreciated thanks

 

[Byzantium]

Are you on a lease or license ?

Full repairing and insuring or not ?

What does your lease say ?

How much money are we talking about over 18 months ?

Why do you want to leave ?

What does your solicitor who advised you prior to taking up the lease say ?

 

[WaveJumper]

You defiantly need proper legal advice best speak to your solicitor (if possible) who advised you on lease when signed.

 

[eteb3]

First, are you sure you have a right to repair? In many (most?) commercial leases repair falls on the tenant.

can I terminate my commercial lease if the landlord is in breach of contract?

You definitely need a solicitor, but in case a general answer is helpful, the general position is "no".

Usually the two sides of a contract are considered to be interdependent - so if they don't do their bit, you don't need to do yours.

But sometimes they're considered to be independent, and they are here:

A tenant's covenant to pay rent is independent of the landlord's covenant to repair. (Anson on Contracts)

You "covenanted" (promised in a deed) to pay the rent, so you must continue to pay the rent. Assuming they covenanted to repair, they must do that, too - but it's a separate matter.

So what you would normally do is give landlord plenty of notice, then if default continues you do the work yourself and recover the cost from them in damages (and NB you can't deduct it from the rent). You may also be able to claim damages for loss of business (closing tables).

But it's massively complicated, and will anyway depend on the precise terms of the lease. So find a specialist solicitor. I know of one, if that's helpful - PM me.

 

[eteb3]

PS, if this weren't a lease, then "requesting to end the contract" would acknowledge you have no right to do so (you requested a favour) and thus confirm the contract still stands.

Instead you would state that if default isn't remedied by ddmmyyyy, you will consider the contract discharged and all your obligations at an end. But you would want legal advice on that, too, or else eat the risk of being sued.

 

[Mark T Jones]

Adding to the above, this s wholly a contractual dispute, therefore the contact & all aspects of performance under that contract are absolutely critical to any meaningful or conclusive response.

That means sitting down with a solicitor (who specialises in commercial contracts) and paying for advice.

 

[marie44]

Are you on a lease or license ?

Full repairing and insuring or not ?

What does your lease say ?

How much money are we talking about over 18 months ?

Why do you want to leave ?

What does your solicitor who advised you prior to taking up the lease say ?

Hi, it's a lease, and fully repairing etc, the 18mths would cost us around £13,000, the lease says the landlord has to repair roofs I will attach a screen shot of the lease section 6.2.
We want to leave as its a shopping centre, the owners won't repair the main doors so in the winter all cold weather blowing through the whole centre, no heating in the centre so the customers wont come in, wr have read this on reviews, so footfall has dropped by 50% in our side mall, we have the files off the manager to prove this. Lots of the large units are not being filled, so customers say there is no point in coming here, there are leaks all over the whole centre and not being repaired, lools like the owners have bought the centre to let it tick over before either selling on or maybe demolishing in the future? Who knows? We need to leave before our business is ruined. Sorry about the long email

 

[eteb3]

On the face of it then you have a claim for the ingress of water. You may need to show specific losses: can you show fall in earnings when you closed your tables? (not just 50% footfall)

Does the LL have a covenant to keep the shopping centre as a whole in good repair? If so you may have a claim against them for that.

Even if not, they may have breached the implied obligation not to "derogate from their grant" of the lease - ie, to give a lease for a given use (cafe in retail unit), then use the adjoining land in a way that frustrates that use.

Solicitor, solicitor, solicitor.

 

[eteb3]

Solicitor, solicitor, solicitor.

But since I'm a glutton for this sort of thing,,,

Derogation from grant

 

[Gyumri]

If your company has no assets other than knives and forks and a few stale buns then I would just up and leave and relocate the bakery business to somewhere where a landlord appreciates your custom.

If there are ovens in situ I would remove those first before vacating.

 

[eteb3]

I would just up and leave

If there are ovens in situ I would remove those first

lol

 

[marie44]

We would love to haha, we are now a limited company, but wasn't when we signed the contract so not sure where we stand? Also, where would we stand legally if we up and left? It's out first business so completely clueless on this kind if thing thanks for your reply too

 

[marie44]

You defiantly need proper legal advice best speak to your solicitor (if possible) who advised you on lease when signed.

Thanks

 

[marie44]

First, are you sure you have a right to repair? In many (most?) commercial leases repair falls on the tenant.


You definitely need a solicitor, but in case a general answer is helpful, the general position is "no".

Usually the two sides of a contract are considered to be interdependent - so if they don't do their bit, you don't need to do yours.

But sometimes they're considered to be independent, and they are here:

You "covenanted" (promised in a deed) to pay the rent, so you must continue to pay the rent. Assuming they covenanted to repair, they must do that, too - but it's a separate matter.

So what you would normally do is give landlord plenty of notice, then if default continues you do the work yourself and recover the cost from them in damages (and NB you can't deduct it from the rent). You may also be able to claim damages for loss of business (closing tables).

But it's massively complicated, and will anyway depend on the precise terms of the lease. So find a specialist solicitor. I know of one, if that's helpful - PM me.

Thank you

 

[marie44]

Adding to the above, this s wholly a contractual dispute, therefore the contact & all aspects of performance under that contract are absolutely critical to any meaningful or conclusive response.

That means sitting down with a solicitor (who specialises in commercial contracts) and paying for advice.

Thank you

 

[marie44]

On the face of it then you have a claim for the ingress of water. You may need to show specific losses: can you show fall in earnings when you closed your tables? (not just 50% footfall)

Does the LL have a covenant to keep the shopping centre as a whole in good repair? If so you may have a claim against them for that.

Even if not, they may have breached the implied obligation not to "derogate from their grant" of the lease - ie, to give a lease for a given use (cafe in retail unit), then use the adjoining land in a way that frustrates that use.

Solicitor, solicitor, solicitor.

Thank you

 

[AlanJ1]

We would love to haha, we are now a limited company, but wasn't when we signed the contract so not sure where we stand? Also, where would we stand legally if we up and left? It's out first business so completely clueless on this kind if thing thanks for your reply too

Is the lease in your name or LTD companies name?

 

[eteb3]

It's out first business so completely clueless on this kind if thing

You need a solicitor.
You need a solicitor.
You need a solicitor.

we are now a limited company, but wasn't when we signed the contract so not sure where we stand?

Did you get the LL's agreement to assign the lease to the Ltd? Assuming not, every person who signed the lease is liable for all amounts due under it: the LL can sue any of the signors for the whole amount.

The whole amount isn't just the rent, but all sums due.

Unless the lease was legally assigned, you may well have granted an equitable lease to the Ltd, almost certainly in breach of the lease terms.

where would we stand legally if we up and left?

You would be liable for the rent.* You would also be liable for anything else due under the lease.* For example, you may have a covenant to stay open for trade, and LL can sue you for closing up (as well as for the rent). You may be liable for not putting whitewash in the windows. You may be liable to buy the centre manager a subscription to the local golf club. Literally anything the lease says.

A commercial lease is the most complex and most onerous agreement any SME is ever likely to encounter. By your own admission you are clueless. You need a solicitor.

*Edit: unless your solicitor can get you off the hook, as discussed above. But you need a solicitor.

 

[WaveJumper]

You need a solicitor.
You need a solicitor.
You need a solicitor.


Did you get the LL's agreement to assign the lease to the Ltd? Assuming not, every person who signed the lease is liable for all amounts due under it: the LL can sue any of the signors for the whole amount.

The whole amount isn't just the rent, but all sums due.

Unless the lease was legally assigned, you may well have granted an equitable lease to the Ltd, almost certainly in breach of the lease terms.


You would be liable for the rent.* You would also be liable for anything else due under the lease.* For example, you may have a covenant to stay open for trade, and LL can sue you for closing up (as well as for the rent). You may be liable for not putting whitewash in the windows. You may be liable to buy the centre manager a subscription to the local golf club. Literally anything the lease says.

A commercial lease is the most complex and most onerous agreement any SME is ever likely to encounter. By your own admission you are clueless. You need a solicitor.

*Edit: unless your solicitor can get you off the hook, as discussed above. But you need a solicitor.

And having come from this side of the business ....... the landlord solicitors normally have 'pretty big boots" and won't hesitate to use them, so do as suggested by @eteb3 myself and others above get some legal advice BEFORE doing anything

On a second point have you requested a meeting with the landlord direct, go above the centre manager (assuming you have one on site) he may well not be passing all information on especially as it would be his responsibility to be fixing the issues

 

[marie44]

But since I'm a glutton for this sort of

Thank you I will look in to this

Is the lease in your name or LTD companies name

Is the lease in your name or LTD

Is the lease in your name or LTD companies name?

Our names

You need a solicitor.
You need a solicitor.
You need a solicitor.


Did you get the LL's agreement to assign the lease to the Ltd? Assuming not, every person who signed the lease is liable for all amounts due under it: the LL can sue any of the signors for the whole amount.

Thank you all for your advice we will seek legal advice

You need a solicitor.
You need a solicitor.
You need a solicitor.


Did you get the LL's agreement to assign the lease to the Ltd? Assuming not, every person who signed the lease is liable for all amounts due under it: the LL can sue any of the signors for the whole amount.

The whole amount isn't just the rent, but all sums due.

Unless the lease was legally assigned, you may well have granted an equitable lease to the Ltd, almost certainly in breach of the lease terms.


You would be liable for the rent.* You would also be liable for anything else due under the lease.* For example, you may have a covenant to stay open for trade, and LL can sue you for closing up (as well as for the rent). You may be liable for not putting whitewash in the windows. You may be liable to buy the centre manager a subscription to the local golf club. Literally anything the lease says.

A commercial lease is the most complex and most onerous agreement any SME is ever likely to encounter. By your own admission you are clueless. You need a solicitor.

*Edit: unless your solicitor can get you off the hook, as discussed above. But you need a solicitor.

Thank you for all of your advice, we will definitely seek legal advice