Commercial Property Article
09 December, 2016
Q. I am holding a Christmas fair at my café during the festive season in which alcohol will be served - can I do this?
A. If your premises is unlicensed then you will need to apply to your local Council for a Temporary Event Notice ("TEN"). The event capacity must be less than 500 people and duration must not exceed 168 hours. There are a number of conditions which must be complied with when serving your TEN including the parties who the application must be served on, the number of TENS permitted per year and the notice period required before the event. You should also check you lease to ensure that there are no prohibitions in relation to serving or selling alcohol. We would advise considering these requirements early on to ensure that your customers can enjoy plenty of mulled wine along with their mince pies.
Q. I am considering granting a lease to a tenant but I have some concerns about the tenant's financial standing. Is there anything I can do to try to protect my position?
A. There are a few options available to the landlord in this situation.
If the lease is for a relatively short term, a straightforward option would be to seek a rent deposit from the tenant before entering into the lease. The tenant would be required to pay a sum of money (usually 3-6 months' rent) in advance, which the landlord is able to drawn upon in case the tenant fails to pay the rent under the lease for any reason. A rent deposit should be documented in a Rent Deposit Deed to set out the how the deposit should be paid and the circumstances under which is can be drawn upon by the landlord.
For leases with a longer term where a rent deposit may not be as effective, a landlord can seek a guarantee from a third party (usually the tenant's holding company, or a personal guarantee from the tenant company's directors), guaranteeing the liability of the tenant under the lease. It is important to note that the strength of a guarantor is only as good as the guarantor's financial position, so the landlord should investigate a guarantor's financial standing before agreeing to a guarantee. As with rent deposit, the terms of a guarantee should be specifically documented so that all parties are aware of their obligations and when the guarantee would come into effect.
Q. My Lease is excluded from the Landlord & Tenant Act 1954 - what does this mean?
A. Under Part II of the Landlord & Tenant Act 1954 (LTA 1954), the standard position in commercial leases is that tenants have security of tenure which provides an automatic right to renew the lease at the end of the term subject to the landlord going to court to obtain an order to remove the tenant on certain limited grounds. However these rights can be excluded, as here, and therefore as the Lease will be excluded you will not have the right to renew the Lease nor to remain in the Premises at the end of the term. Therefore you must be prepared for the fact that the landlord can make you leave the Premises on expiry of the term and you will not be entitled to remain in the Premises or to seek any compensation.
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