The Rent Review Specialist
Occupancy
Lease
The terms and conditions of a tenancy are embodied in a document, known as a 'lease'. Although the terms and conditions of the completed agreement are commonly referred to as the lease, in fact the lease is simply the document itself. The document is a written record of the terms and conditions that comprise the agreement between landlord and tenant for the premises.
A type of occupancy known as a licence can cause problems and is generally to be avoided. A licence is a personal privilege that makes lawful that which would be unlawful otherwise. Although strictly a lease is a document, in popular parlance a lease and tenancy are interchangeable. With a licence, calling a document a licence does not make it one, so whilst the intention may be licence, in practice, the arrangement may constitute a tenancy. Amongst the tests to determine whether the occupancy is a licence or tenancy is whether the occupier has exclusive possession of the premises but, per business law, exclusive possession does not necessarily negate a licence.
The relationship between landlord and tenant hinges upon the terms and conditions of the tenancy. A tenancy (or ‘lease’) is a contract for a certain term and has a date of document, a tenancy contractual term start date and contractual term expiry (end date). When a tenancy is for a business purpose, the lease is a commercial contract which means the parties are in law deemed to know what they are doing.
Generally, the onus is on the landlord’s side to draft the documentation, and for the tenant’s side to approve. Although early leases were not unsophisticated, the trend over the years has been the widespread use of precedents and a general tightening of the “small print” so as to minimise management expenses with more control for the landlord of the relationship between landlord and tenant.
Basically a lease contains terms and conditions for the operation, management and enforcement of the tenancy. The landlord and tenant, known as the parties, can agree whatever terms and conditions they like for the tenancy, but some requirements are governed by overriding legislation.
Because different landlords and different tenants have different requirements and shops, in common with all commercial properties, are different, there is no standard form of lease in use generally. Whilst many landlords and tenants have their own standard wording for the documentation, also the Law Society, for example, has a standard document for use by landlords and tenants, one cannot buy a ready-made document and simply fill in the blanks and reasonably expect the tenant to sign without question, or at least not without changing some wording. Normally, what happens is that after outline terms have been agreed between the parties and 'heads of terms' agreed, the lawyers for the respective parties, sometimes with the help of respective surveyors, draft and approve the documentation from scratch.
Because tenancies often last for years, and the wording of terms and conditions can be fashionable, the content of leases varies considerably. Also, although the terms and wording of a lease cannot be changed after completion, except by rectification or mutual agreement, leases are assets that can be bought, sold, transferred and mortgaged. During the life of a lease it is common for related agreements to be entered into by the parties and their successors. Such agreements include deeds of variation, rent deposit deeds, licences to alter, change the use, assign, underlet, rent review memoranda, and side-letters.
Confusion can arise when, in the drafting of a lease, the draftsman uses the word ‘lease’ when referring to commencement dates for purpose of term, rent, and rent reviews. In modern leases, each expression or phrase will usually be defined in the lease so as to leave no scope for different interpretation, but where the draftsman does not, or phrasing or expression definitions are incomplete, and instead refers casually to the date of the lease, an ambiguity can arise where the lease states that rent reviews are at stated intervals during the term but the review dates themselves are calculated from commencement of the lease.
For some reason, best known to the world of lawyer-draftsmen, the wording and phrasing in leases, especially in the realm of rent review, is often unbelievably convoluted. Commonly, rent review dates are not specified, such as 25 December 2006, 25 December 2011, but referred to as intervals such as 5th and 10th anniversaries, which is all very well provided it clear from the wording of the lease from which each particular anniversary is computed.
Generally, any and all other documents related to the lease may be loosely included in the definition of lease. Usually, other documents, such as licences to alter, vary the user, deed of variation, deed of rent deposit, memoranda, and side-letters, are likely to mention the lease itself, so the wording and content of associated and related documents could affect the rental and/or capital value.
A type of occupancy known as a licence can cause problems and is generally to be avoided. A licence is a personal privilege that makes lawful that which would be unlawful otherwise. Although strictly a lease is a document, in popular parlance a lease and tenancy are interchangeable. With a licence, calling a document a licence does not make it one, so whilst the intention may be licence, in practice, the arrangement may constitute a tenancy. Amongst the tests to determine whether the occupancy is a licence or tenancy is whether the occupier has exclusive possession of the premises but, per business law, exclusive possession does not necessarily negate a licence.
The relationship between landlord and tenant hinges upon the terms and conditions of the tenancy. A tenancy (or ‘lease’) is a contract for a certain term and has a date of document, a tenancy contractual term start date and contractual term expiry (end date). When a tenancy is for a business purpose, the lease is a commercial contract which means the parties are in law deemed to know what they are doing.
Generally, the onus is on the landlord’s side to draft the documentation, and for the tenant’s side to approve. Although early leases were not unsophisticated, the trend over the years has been the widespread use of precedents and a general tightening of the “small print” so as to minimise management expenses with more control for the landlord of the relationship between landlord and tenant.
Basically a lease contains terms and conditions for the operation, management and enforcement of the tenancy. The landlord and tenant, known as the parties, can agree whatever terms and conditions they like for the tenancy, but some requirements are governed by overriding legislation.
Because different landlords and different tenants have different requirements and shops, in common with all commercial properties, are different, there is no standard form of lease in use generally. Whilst many landlords and tenants have their own standard wording for the documentation, also the Law Society, for example, has a standard document for use by landlords and tenants, one cannot buy a ready-made document and simply fill in the blanks and reasonably expect the tenant to sign without question, or at least not without changing some wording. Normally, what happens is that after outline terms have been agreed between the parties and 'heads of terms' agreed, the lawyers for the respective parties, sometimes with the help of respective surveyors, draft and approve the documentation from scratch.
Because tenancies often last for years, and the wording of terms and conditions can be fashionable, the content of leases varies considerably. Also, although the terms and wording of a lease cannot be changed after completion, except by rectification or mutual agreement, leases are assets that can be bought, sold, transferred and mortgaged. During the life of a lease it is common for related agreements to be entered into by the parties and their successors. Such agreements include deeds of variation, rent deposit deeds, licences to alter, change the use, assign, underlet, rent review memoranda, and side-letters.
Confusion can arise when, in the drafting of a lease, the draftsman uses the word ‘lease’ when referring to commencement dates for purpose of term, rent, and rent reviews. In modern leases, each expression or phrase will usually be defined in the lease so as to leave no scope for different interpretation, but where the draftsman does not, or phrasing or expression definitions are incomplete, and instead refers casually to the date of the lease, an ambiguity can arise where the lease states that rent reviews are at stated intervals during the term but the review dates themselves are calculated from commencement of the lease.
For some reason, best known to the world of lawyer-draftsmen, the wording and phrasing in leases, especially in the realm of rent review, is often unbelievably convoluted. Commonly, rent review dates are not specified, such as 25 December 2006, 25 December 2011, but referred to as intervals such as 5th and 10th anniversaries, which is all very well provided it clear from the wording of the lease from which each particular anniversary is computed.
Generally, any and all other documents related to the lease may be loosely included in the definition of lease. Usually, other documents, such as licences to alter, vary the user, deed of variation, deed of rent deposit, memoranda, and side-letters, are likely to mention the lease itself, so the wording and content of associated and related documents could affect the rental and/or capital value.