Should I Instruct a Solicitor When Entering Into a Lease?

It is not a legal requirement to use a solicitor when entering into a lease of a commercial premise; however, it is highly recommended that you do. Your solicitor will make sure you are fully aware of the risks and your obligations. They will also be able to advise you on how to resolve any potential issues before signing the commercial lease.

Title Review

Your solicitor will review the landlord’s title to the property and raise any enquiries necessary. They will check that the correct party is granting the lease and whether there are any issues registered on the title that you should be aware of, such as a right of way or restrictive covenants. Your solicitor will also check that there are no existing leases of the same property. If the landlord has a charge registered on the property, the lender’s consent to the lease will be required, and your solicitor will ensure this is provided before or on completion.

Commercial Lease Review

Your solicitor will review the draft lease and seek amendments to any onerous terms. Often commercial leases drafted by landlords are in their favour. For example, it is common to see in the first draft of a commercial lease an obligation on a tenant to put the property in a better state of repair than it was at the start of the lease at their own expense. At the end of the term, the landlord can make what is known as a dilapidations claim. These can be very expensive, and so a tenant must know its position before entering into a lease. Once the commercial lease is agreed, your solicitor will report to you on the terms of the lease so that you know exactly what you are signing up to. 

Stamp Duty Land Tax

SDLT will be payable on leases over a certain threshold. Your solicitor will calculate the total amount payable, and they will submit the SDLT return to the HMRC and make the payment. It is important you are fully aware of your stamp duty liabilities, as late payments can lead to penalties and interest charges.

Registration at the Land Registry 

If your lease is for seven years or more, it must be registered at the Land Registry. This is compulsory, and your lease will not be legally valid if it isn’t registered within two months. If your lease is for less than seven years, it can still be noted at the Land Registry, but it won’t get its own title number. This will mean that if the landlord sells its interest on or grants a charge to a lender while you are a tenant at the property, the new owner or lender will know about your lease, and your interest will be protected.