Take Notice: Getting Commercial Lease Notices Right

James Holton, a property litigation specialist at the Firm’s Gadbrook Park office, expresses the importance of seeking legal advice prior to serving a commercial lease notice.

In the current economic landscape notices to terminate or renew leases are becoming increasingly frequent.  Indeed, empty premises are a frequent sight on the high street in a challenging retail environment.  Getting lease notices right is crucial to preserving an investment in any property or business.

What is a lease notice?

You may be a landlord seeking to serve a Section 25 Notice upon a tenant so as to recover possession so that you can redevelop your premises.  Alternatively, you may be a tenant serving a Section 26 Notice seeking to renew the lease in order to continue to grow your business from the same site. In addition, leases often contain provision for the landlord or tenant to serve a break notice to end the lease before its contractual expiry.

The terms upon which premises are leased are crucial to both parties with sometimes onerous and prescriptive methods of serving a valid notice.  You will need to ensure that the notice is served upon the correct party and by the correct method.

For leases protected under the Landlord and Tenant Act 1954, a tenant has the right to make an application to Court to renew their lease before it expires.  A landlord can only successfully oppose such an application under specified grounds such as where it intends to demolish or reconstruct the premises or where it intends to occupy them for their own business or residential purposes.  Each party’s position must be precisely and expertly articulated.

What can go wrong?

Incorrect Parties

Whilst it might sound obvious, it is crucially important to name the correct parties. For example a party may be an individual, a partnership or a limited company. Alternatively a different party may now be in occupation. Various enquiries may need to be made to confirm that the details are correct.

Incorrect Address

The address of the party receiving the notice may be out of date. However a lease may prescribe the address to which any notice must be sent. You may therefore need to serve notice on more than one address.

Method of Service

If the lease provides for service of a notice by a particular method (e.g. by hand) then this must be followed. An alternative delivery method may not amount to valid service even if the notice is received by the other party.

Timing

It is important to get the timing right and to allow sufficient time to send any notice. You should diarise any break date or expiry of a lease many months in advance and speak with your solicitor or surveyor for advice.

Incorrect Notice

There may be a variety of options and strategic considerations in play. It is important to consider which notice to serve or whether more than one notice needs to be served.

The lease may contain a set form of notice which must be followed. If this form is not strictly followed the receiving party may challenge its validity.

 

At Butcher & Barlow, we have experience of situations where parties have served their own notices which have resulted in litigation when the receiving party has challenged the notice.

Whether you are a landlord or tenant, it is essential that you seek early and specialist advice in relation to the management of your portfolio.  We regularly work with institutional landlords plus SME and retail tenants (as well as their surveyors) in the drafting and service of a variety of notices in order to assist with efficient lease management.