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Advice for business

Transferring a Commercial Lease

A commercial lease is usually a commitment to occupy a property and pay rent and other charges for a specific period of time. However, business needs change and, for one reason or another, it sometimes becomes necessary to find a way out of your obligations.

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Your options could include terminating the lease under a break clause, however, these can usually only be exercised at specific points during the lease term. What may be a better option is to transfer the lease to another tenant using the process of assignment.

At Frettens, our highly experienced team of commercial property solicitors includes several dedicated commercial lease specialists. We can provide all the advice and guidance you need about transferring commercial leases. We advise both commercial landlords and tenants across a wide array of sectors. Our clients range from individual investors and sole traders, to start-ups and SMEs, to large corporations and investment funds.

By combining expert legal knowledge with a commercially-focused approach, we can tailor a bespoke solution to suit your business’s needs and to help you achieve your commercial goals.

Contact our commercial lease solicitors in Bournemouth, Poole, Christchurch, Ringwood and the New Forest

We have offices in Christchurch and Ringwood. Our Commercial Property team also covers Bournemouth, Poole, Ringwood and the New Forest, with the majority of our clients located in the Bournemouth and Poole area.

We are happy to offer a free initial 30-minute meeting for all new clients to discuss your needs over a cup of tea or coffee at either one of our offices or virtually over the phone or via video link.

If you live in Bournemouth or Poole:

Please do not be put off by our location and please do not hesitate to contact us. Our commercial property solicitors will be very happy to speak with you.

Our commercial lease assignment expertise

We are known for our leading expertise in the area of commercial property, with the team having been highly ranked in Dorset and the South Wiltshire region by prestigious client guide, the Legal 500. Our Head of Commercial Property, Oonagh McKinney has also been personally recommended in the latest Legal 500 directory.

Our team includes a number of commercial leasehold specialists, such as Niki Adkins and Ben Cobb who both have extensive experience handling commercial lease assignments on behalf of individuals and businesses across the region and beyond.

How does assignment work?

Commercial lease assignment is the process of transferring a lease into someone else’s name. While the new tenant becomes responsible for complying with the terms of the lease, the original tenant will usually be required to sign an Authorised Guarantee Agreement; this means they will continue to have some obligations to the landlord in case the new tenant breaches the terms of their lease (for example, they fall into rent arrears).

Typically, a commercial lease is transferrable with the consent of the landlord and they can provide a Licence to Assign authorising the transfer. However, it really comes down to the terms of the lease document – some forbid assignment altogether.

When advising clients before they have entered into a lease, we always review the proposed terms and provide guidance on assignment and the implications of any restrictions on assigning the lease. However, if that ship has already sailed, we can help you explore a wide range of other options, including termination.

Most leases contain some restrictions on assignment, which can be overcome with the consent of the landlord. We can liaise with the other party on your behalf, negotiate any refusals to consent, and take all necessary steps to protect your business and legal interests throughout the assignment process.

For tenants, if we have grounds to believe that the landlord is unreasonably withholding consent, we can provide clear, practical advice about taking legal action to enforce your rights. For landlords, we have experience rebuffing legal claims by tenants seeking authorisation to assign their lease. We regularly work closely with our Business Dispute Resolution team to help businesses find efficient, cost-effective solutions to their disputes in line with their commercial objectives.

Read our article on Transferring/assigning a commercial lease to someone else for a more in-depth breakdown of the assignment process.

How else can you get out of a commercial lease?

As part of our service, we can provide detailed advice about all your legal options. There are countless reasons why your commercial lease may longer suit your interests; it may be that you have outgrown the premises, you may be downsizing or shutting up shop altogether, or perhaps the lease is simply too expensive. Whatever the reason, we will provide carefully tailored advice designed to achieve your commercial goals.

As well as assignment, we can provide advice on:

  • Break clauses – clauses that allow a commercial tenant (and in some cases, the landlord) to terminate the lease during the term. Improperly exercising a break clause could result in a breach of your commercial tenancy, so seeking specialist legal advice is essential.
  • Subletting – partially or wholly underletting the premises may be permitted with the landlord’s consent (unless completely forbidden under the terms of the lease). The tenant will become a landlord under the sub-lease but will continue to have obligations towards their landlord under the head lease. Therefore, obtaining expert legal advice about complex legal implications of subletting is essential.

Contact our commercial lease solicitors in Bournemouth, Poole, Christchurch, Ringwood and the New Forest

We have offices in Christchurch and Ringwood. Our Commercial Property team also covers Bournemouth, Poole, Ringwood and the New Forest, with the majority of our clients located in the Bournemouth and Poole area.

We are happy to offer a free initial 30-minute meeting for all new clients to discuss your needs over a cup of tea or coffee at either one of our offices or virtually over the phone or via video link.

 

FAQs - Transferring a Commercial Lease

Are commercial leases transferrable?

In most cases the lease is transferrable with the consent of the landlord. However, some leases contain an absolute bar on assignment or underletting so it is important to review the relevant provisions within the lease, which will also detail the requirements of the landlord on any assignment or underletting. In this case the landlord may still be prepared to give consent but is entitled to refuse it.

Can I back out of a lease I just signed?

You usually just can't back out of the lease, as it is a commitment for the entire term. If you are having difficulties, you should discuss this with your landlord to see if they are able to assist. If your lease has a break clause, you can exercise that or try one of the other alternative referred to above.

Are there restrictions on transferring a lease?

Almost every commercial lease contains restrictions on assigning, subletting or otherwise transferring the leased premises to another party and will detail any requirements for transferring the lease.

Ben Cobb is a Solicitor in the Commercial Property team. He says â€Åâ€Åâ€Å“These restrictions are reasonable in concept from the perspective of the landlord, so as not to have tenants circumvent the landlord's control of the premises.”

How do I attain the landlord's consent for lease transfer?

Obtaining landlord’s consent may seem a simple matter but it can never be regarded as a mere formality.

Ben warns â€Åâ€Åâ€Å“Failing to obtain the landlord’s consent when it is required can lead to severe financial penalties. Consent should always be recorded in a formal document to avoid arguments.”

An application for consent to assign should usually be sent to the landlord or its agents.

The tenant will be liable for the landlord’s costs whether or not the application is approved (although it may be possible to get the assignee to pay if the assignment is completed).

The landlord is entitled to ask for further documentation or information regarding the potential tenant, in order to make a decision.

Can a landlord refuse consent for commercial lease transfer?

Most leases will say that the landlord cannot â€Åâ€Å“unreasonably” withhold consent, but in any case a proviso to the effect that consent is not to be unreasonably withheld will be implied by the Landlord and Tenant Act 1927.

The Landlord and Tenant Act 1988 also states that a landlord owes a duty to the tenant to give consent except in a case where it is reasonable not to give consent. The landlord may give consent subject to conditions.

The landlord is also under a duty to deal with an application within a reasonable time and must give the tenant written notice of his decision whether or not to give consent. If the consent is withheld the landlord must specify its reasons for withholding it.

Ben says â€Åâ€Å“Of course, the tenant may not agree with the landlord’s reasons if consent is withheld. If the landlord cannot be persuaded to change its mind, it is possible to challenge the decision in the courts, but this can be difficult and expensive.”

What is a break clause for a commercial property?

A clause within the lease that enables you to bring your tenancy to an end before the expiry of the contractual term.

What does a break clause look like?

Every break clause is different and it is important that you read and understand your break clause carefully. The main types of break clauses are called rolling breaks and fixed-date break. A rolling break usually allows the lease to end at any time on giving a certain amount of notice. A fixed-date break will only permit a break on a set date, so it is particularly important that you get the service of notices correct with these type of break clauses.

How do you activate a break clause?

Again, every break clause is different. They will usually be quite prescriptive as to what must be included in the notice, who it must be served on, how it is to be served and if there are any conditions attached to the ability to break.

Get in touch with our solicitors today

We offer a free initial appointment to all new clients. To get in touch with our expert solicitors in Christchurch and Ringwood, simply call 01202 499255 or visit our get in touch page.

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