Commercial Tenants - 8 Tips When Assigning or Subletting Your Lease

Commercial property is a complicated area, particularly when it comes to subletting

. If you are a commercial tenant thinking about subletting or assigning your lease, or if you are already a tenant that is subletting your premises, it is likely that you are not fully sure of your legal rights and the problems that can happen. Here are some vital facts to make sure you get things right.1. I am going to sublet my premises, but my landlord is demanding that I charge my subtenant a rent that is above market average. Many landlords will insist on this as a matter of course. However, according to the Code of Conduct for Commercial Leases (which is supported by the Government), this should not be the norm.2. My landlord is about to terminate the lease as my subtenant has broken the terms of my commercial lease. There is nothing I can do about this.The terms of any sublease require careful consideration at the negotiation stage so as to avoid this problem. However, the law may allow you to prohibit the actions of the subtenant so as to prevent the terms of your lease being breached in the future.3. As a subtenant I use the premises as a takeaway, which is allowed by the terms of my lease. However, I am required to stop using the premises as a takeaway as the head landlord has informed me that I am in breach of the terms of the head lease.The terms of any sublease need careful consideration at the negotiation stage so as to avoid this problem. However, the law may still allow the head landlord to stop the subtenant's use in these circumstances. This problem should have been predicted when the terms of the lease was initially settled.4. I am about to assign my lease and the landlord has insisted that I provide a guarantee to the landlord that the assignee will pay the rent.Many landlords will insist on this as a matter of course. However, according to the Code of Conduct for Commercial Leases (which is supported by the Government), this should not be the norm.5. I am about to assign my lease and have been advised that I do not need the consent of the landlord.This is not always the case. It is rare in a commercial lease to find that consent is needed, however this will be different for each lease - check your terms. The circumstances in which consent can be withheld should be determined when the lease is being negotiated.6. I would like to assign my lease, but my landlord says he will not give consent.The circumstances in which the landlord can withhold consent depend partly on the terms of the lease and partly on the general law. Normally a landlord cannot withhold consent unreasonably.7. I am going to sublet my premises, but my landlord is demanding that I charge my subtenant a rent that is above market average.Many landlords will insist on this as a matter of course. However, according to the Code of Conduct for Commercial Leases (which is supported by the Government), this should not be the norm.8. My lease is about to be ended by my landlord as my subtenant is in breach of the conditions of my lease. There is nothing I can do about this.The terms of any sublease require careful consideration at the negotiation stage so as to avoid this problem. However, the law may allow you to prohibit the actions of the subtenant so as to prevent the terms of your lease being breached in the future.In all situations involving subletting or assigning of commercial leases, whichever side of the transaction you are on, we recommend that you contact an expert commercial property lawyer who will be able to advise you on your case, and help you work out the best deal for you.


Commercial Tenants - 8 Tips When Assigning or Subletting Your Lease

By: Tim Bishop

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