A commercial lease is a contract made between the landlord of a commercial property and a tenant, setting out the terms and conditions under which the premises will be leased. It is an onerous document, generally including responsibilities for both parties.

Before signing, your solicitor can negotiate the terms of the lease to ensure that they are right for your situation and offer you what you and your business need.

Key clauses in commercial leases include:

• The term of the commercial lease agreement
• How forfeiture of the commercial lease can occur
• Break clauses, allowing a tenant to exit early
• Whether the tenant has the right to renew the lease or whether this right is excluded
• What rent is payable
• When and how the rent will be reviewed
• Repairing obligations
• How service charges will be calculated and paid
• How the premises can be used
• Whether alterations can be made and how to obtain the landlord’s consent for these
• The requirement to insure the property
• Whether the lease can be assigned or the property sublet and the process for dealing with this

It is crucial to ensure that a commercial lease gives you the flexibility to use the premises in the way that you want and that the clauses are reasonable for your situation. You should also consider how you might want to change the way you use the property, should your business expand or go in a new direction in the future.

Our commercial property lease solicitors have the experience to ask the right questions and negotiate the terms of the lease so that they suit your needs. We can advise you on the proposed clauses and discuss any changes that might be recommended. We will then negotiate with the other side to try and agree on an improvement to the agreement.

It is not always straightforward to end a commercial lease. If the lease includes a break clause, then you can use that. You must make sure you follow the correct process, as breach of a commercial lease by the tenant or the landlord can result in penalties or the loss of rights.

If there is no break clause, you can approach your landlord and discuss whether they are prepared to end the lease informally. You will usually need to make a payment to the landlord to be released from the agreement. Our team can negotiate on your behalf to try and secure an acceptable offer.

If you are not able to agree on a surrender of the lease, you may be entitled to assign the lease or sublet the property to another tenant. Again, the lease will set out the process for doing this, which will generally include securing the landlord’s approval to the new tenant. You will usually still be liable for any unpaid rent should the new tenant fail to pay at any point.

As a landlord, you may have the option of serving a section 25 notice ending the existing lease if you have valid grounds for doing so.

If the lease includes renewal provisions, then as a tenant you can use these if you wish to stay in the property.

As a commercial tenant, you may have an automatic right to renew your tenancy, known as security of tenure, unless this has been specifically excluded in the terms of the lease.

If there are no renewal provisions, you can negotiate with the other party if you wish to continue with the agreement. All terms and conditions can be renegotiated if you will be putting a new lease in place, and we can represent you in dealing with the lease renewal.

Whether you are the landlord or the tenant, you are strongly advised to use expert property lease solicitors when entering into a commercial property agreement. You need to be sure that the contract is in your best interests and that all eventualities have been considered.

A commercial lease lawyer will be able to assess the terms that have been offered, advise you of any areas of concern and work to negotiate more favourable clauses. Our team will also look at your overall commercial objectives and check that the lease accords with these, to include flexibility in case of potential future changes in your situation or market conditions.

The payment of legal fees can be negotiated at the start of the deal. The usual options are either both party covering their own costs or the tenant paying the landlord’s reasonable costs for certain work. For example, a tenant may be expected to pay the landlord’s costs of approving a new tenant if the property is to be sublet or assigned as well as their legal fees for advice on any new agreement.

If you are involved in a breach of commercial lease case, then the winning party will generally be expected to pay the losing party’s costs, although there are some exceptions.