9.1.4. Legal risks
If you lease a building or part of a building, you can be at risk if you do not understand or are not fully aware of your lease obligations |
This may result in a dispute with your landlordLandlord: The person or organisation which grants a lease of property to a tenant. because you have failed to comply with a leaseLease: A document giving a tenant the legal right to occupy a property. requirement. Alternatively, you may miss an important opportunity because you were not aware of a key date.
Realising such risks are likely to have a monetary impact on you as occupierOccupier: Any person or organisation which occupies property. of the building so can be considered to be financial risks as well as legal risks.
Examples
You no longer require your property and you would like to end your lease. There is a break clauseBreak clause: The right to end a lease on one or more specified dates before the lease expiry date., but you have missed the opportunity to break the lease because you were not aware of the terms of the break clause and the deadline for serving a noticeBreak clause notice: A formal notice that must be served to break a lease. to break.
You were unaware of the requirement to return the property you rentRent: A tenant’s regular payment to a landlord for the use of property or land. in good repair and condition at the end of the lease. As a result, the landlord makes a substantial dilapidationsDilapidations: Disrepair or outstanding maintenance resulting from a tenant’s failure to comply with the repairing obligations in a lease. claim against you. This could mean that you have to either do the work yourself or pay the landlord the cost of the work.
You did not understand your repairing obligations meaning that work you should have carried out is not done. This can lead to a dispute with your landlord and potential litigation, or the termination of your lease.
You have sub-letSub-let: The grant of a sub-lease (or under-lease)Sub-lease (or under-lease): A lease between a tenant and a sub-tenant.. your property or undertaken alterations without first obtaining landlord’s consent. This is a breach of the requirements of the lease and results in a dispute with the landlord and a threat to forfeitForfeiture: A landlord’s right to terminate a lease early if the tenant fails to comply with a lease clause. the lease.
You have carried out substantial improvements to a building you rent to enable a better delivery of your services. However, the lease only has a few months left before it expires. If the landlord refuses to grant you a new lease you may have to move elsewhere and the value of your improvements will be lost.