Leases have become far more balanced between tenants and landlords in recent years. This is beneficial for tenants but can lead to extended negotiation over lease provisions, especially where landlords are using outdated precedent leases.
We explore some of the key issues to be considered by Watford businesses when agreeing heads of terms and negotiating the provisions of a commercial lease.
The process of negotiating heads of terms
Before the lease drafting or negotiation has even commenced, the respective parties' agents will generally negotiate heads of terms setting out the basis for the lease. It is advisable for the solicitor to be involved at this stage of the transaction and to review and comment on the draft form of heads of terms, as they can ensure all the key points have been covered.
Having balanced and clear heads of terms which are satisfactory to each party is crucial in ensuring that each matter progresses smoothly and quickly.
Whilst the heads of terms are generally stated to be subject to contract it can cause difficulties later down the line if a party wishes to depart from any provision of the heads of terms.
New code for leasing business premises
The Royal Institution of Chartered Surveyors (RICS) published its latest code for leasing business premises in February 2020, replacing its 2007 Code for leasing business premises, which was voluntary.
Benefits of the 2020 code
The 2020 Code does not bind landlords who are not regulated by RICS, however it remains good practice for any landlord to adopt the provisions. This can lead to smoother negotiations between a landlord and tenant and ensure the parties can agree a fair and balanced lease without extensive negotiation, therefore reducing unnecessary legal fees.
David Power is a Partner at VWV, a national law firm with local offices in Clarendon Road, Watford. Get in touch on 01923 919 300 or dpower@vwv.co.uk
David Power is a Partner at VWV, a national law firm with local offices in Clarendon Road, Watford. Get in touch on 01923 919 300 or dpower@vwv.co.uk
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