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Are you confused about some of the language agents and solicitors use when involved in buying, selling or leasing premises? Below are some of the key terms and phrases used in these types of transactions and what they mean.
The existing lease is transferred to a new tenant who takes responsibility for the lease. Normally, the landlord’s consent is required before the assignment can take place.
A clause in a lease giving the tenant, landlord or both the opportunity to end a lease early if certain conditions are met, usually that the notice is in writing and with a minimum notice period and all rents paid to when they are due.
The tenant will not have the legal right to remain in the property at the end of the lease term and does not have a right to a renewal lease.
Commercial property standard enquiries – a set of standard enquiries which a buyer/tenant would expect to have answers to on a purchase/lease. The replies are given by the seller/landlord.
A tenant is normally obliged to reinstate the Property at the end of the lease term to how it was at the time the lease was taken or better. If works are required to do this, these are known as dilapidations.
Energy Performance Certificate – subject to a few exceptions, a certificate must be in place when a property is sold or let. They are usually valid for 10 years and rates how energy efficient a property is.
A lease of a property which places the repair and insurance cost solely on the tenant. The tenant must carry out all repairs and maintenance of the property at its own cost. If only part of a property is leased, the landlord normally carries out repairs but the tenant pays for this by way of a service charge.
Heads of term – a non-legally binding document which sets out the terms which the parties to a transaction have agreed. Usually prepared by an agent.
An owner of land can notify HMRC that it intends to tax the Property meaning that the tenant or a buyer will have to pay VAT on the rents or sale price.
A document that is annexed to a lease which evidences the state of repair of the property at the start of the lease. It limits a tenant’s repairing liability. It usually has photos in it and is used at the end of the lease term when agreeing any dilapidations with the Landlord.
A tenant can grant a lease to another party of either the whole or part of a property which they themselves rent. The tenant then becomes a landlord and collects the rent which they in turn must pay to their landlord under their lease. Consent from the landlord is usually required before any subletting can take place.
If you are involved in a commercial property transaction give us a call on 01606 539955. Our commercial team will be more than happy to help you through the process.
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