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Minefields

9th April 2013

Minefields

Minefields were laid extensively in The First World War by both German and allied forces as a deadly line of defence. In The Second World War The Eighth Army’s celebrated victory at El Alamein in 1942 was dependant firstly upon breaking through enemy mine fields. One of the fundamental principles of laying fields of these ghastly weapons is to plot and retain a detailed record of where you have laid them so at least to avoid self destruction if you need to move through them or remove them at a later date.
 
It has been common practice for many years now for both landlords and tenants to seek to incorporate break clauses into leases, ie a provision in a lease which, should the party with the benefit of such a clause so desire, can bring the lease to a premature end. Landlords will sometimes seek to include such an option where there may be the prospect of redevelopment before the natural end of a lease. However, this device is more commonly sought by tenants, whilst willing to enter into a long lease, say fifteen years or more may wish to incorporate an option to break after five or ten years or even both. These options can provide tenants with both the security and assurance of a long lease and the flexibility to terminate it at an earlier date if business circumstances should make this desirable.
 
A standard Tenant’s Option to Break clause will require a tenant so wishing to exercise their option to give their landlord six months’ notice of their intention of doing so. But, more often than not, when a landlord receives such notice they will be reluctant to release their tenant unless they are absolutely bound to do so. This is especially the case where the rental value has fallen since the lease was granted or where the landlord envisages a long and costly period to re-let to another occupier. A tenant seeking certainty in exercising their break needs to proceed with the utmost caution because case law is littered with minefields. Tripping over any of these mines will almost certainly condemn the tenant to continue their lease upon unwanted premises until the end of the term with burdensome outgoings.
 
A tenant’s notice failed where the lease specified that the notice would only be valid if sent by registered or recorded delivery or, if delivered by hand, a written acknowledgement was received. On the last day for service of the notice it was posted through the wrong letter box. The tenant’s subsequent efforts to serve notice were held to be invalid as they had been served after the expiration of the notice period. In another case the option to break failed because it was conditional upon the tenant repainting in the last year of the term, even though the tenant had repainted in the previous year. Almost always the option is conditional upon the tenant having paid up in full all rent service charge and other obligations. In one case the tenant’s option failed because there was a small amount of interest owing relating to an earlier late payment. Options to break have failed because a tenant has not fully vacated by the option date, i.e. left furniture in the premises or by mistake served notice on a previous landlord.
 
Deactivating mines is hazardous best undertaken by experts. Likewise exercising options to break is best undertaken by experts, i.e. lawyer’s expert in this hazardous field.

Morgan Pryce is a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.


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