Agreements for Lease and Generic Licences
Almost every business is involved in property in some way, either as a tenant or landlord. It is important to establish the terms on which a business is allowed to occupy a premises. A lease is a formal arrangement whereby a tenant has exclusive use of the premises for a specified period of time. Leases usually contain detailed provisions as to what a tenant must and must not do in order to protect the value of the landlord’s interest in the premises and some forms of lease allow a tenant a right to renew a lease at the end of the original lease term. This is known as security of tenure.
The tenancies at will and licences offer the flexibility for a prospective tenant to occupy the premises for a short period prior to the grant of a formal lease but where the tenant needs to occupy sooner rather than later. Care should be taken that a licence cannot be interpreted as a lease. A court might decide that the licensee is really a tenant who has security of tenure. There is also guidance on security of tenure and on the importance of considering whether to give an occupier the right to remain at the end of a lease term or not, and if not, what must be done to exclude this. If there is any doubt as to whether a proposed arrangement will be a lease or a licence, the safest approach is to refuse early occupation of the premises until the formal lease is granted.
The agreements for lease enable the parties to enter an enforceable contract for a lease where the completion of the lease is conditional on conditions being met, for example, the landlord has agreed to carry out various works to the property or the tenant needs to obtain a change of planning use before the lease can be completed.
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For use in England and Wales only
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