Whether you are a landlord of a commercial property, or you are a tenant leasing a business premises, you need to be aware of your rights and obligations. In Scotland these are defined within the terms of lease, and so seeking advice from a legal expert before you sign a contract is essential. If you fail to do so, you could get stuck in a contract with unfavourable terms, which could prove costly both in terms of time and money.
Statutory Rights.
In Scotland, commercial leases focus upon the contract between landlord and tenant. As such, the rights and obligations of each party are largely confirmed within the lease, rather than within the law. This system is, therefore, vastly different from England and Wales where the Landlord and Tenant Act 1954 offers a certain security for landlords and tenants alike.
However, there are times when common law applies to the leasing of commercial property. In particular, a landlord must ensure the building is fit for occupation before it is handed over to a tenant. It must be wind and watertight and any defects must be repaired, while health and safety issues also need to be addressed (including electricity, gas, asbestos management and fire safety).
Terms of Lease.
The rights and obligations of both landlord and tenant are decided within the terms of a lease, meaning every leasehold agreement will differ. That is why it is vital to seek legal advice before signing a contract; otherwise there may not be a fair balance between the interests of landlord and tenant.
A solicitor will be able to help you negotiate the terms of the lease, within which you will need to consider:-
Length of term.
You need to decide whether you want enter a lease for the short-term or the long-term. The maximum amount of time is 175 years.
Use of Property.
Set out exactly what business purpose the property is to be used for.
Rent and rent reviews.
Negotiate how much rent is to be paid, how this is to be regulated, and how the amount of rent is likely to change over time.
Repairs, maintenance and dilapidations.
Be clear as to who is responsible for repairs and maintenance. Often a tenant is liable for those internally, while a landlord is accountable for those externally. It also needs to be agreed who should pay for any repairs when the lease expires (called dilapidations).
Service charges
A tenant needs to be informed of what service charges are to be incurred (such as payment for maintenance of common parts, footpaths and cleaning bills) and whether these can be sourced for themselves.
Assignment, subletting and termination.
Decide upon ways the lease can be ended before the specified date. This could include break clauses, as well as an agreement upon conditions for assignment and subletting.
Security of tenure/Lease end protection.
A tenant needs to outline their rights to renew their lease, securing their entitlement to continue using the property should they wish.
Health and safety checks.
Under the Health and Safety Act 1974, landlords and tenants must plan whose duty it is to meet health and safety checks (such as gas inspections, ensuring adequate ventilation and maintaining electrical wiring.)
Need specialist Edinburgh Property Solicitors? McKay Norwell are Edinburgh Solicitors serving individual and business clients across Scotland
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