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When your landlord sells your building – what are your rights? Pritpal Chahal

 

As a tenant of a commercial premises you will have been advised of your obligations in the lease and what rights you have, if any, to dispose of your leasehold interest during the contractual term. However, what happens if your landlord decides to sell their interest in the premises during your lease term? We consider below what you need to be aware of if your landlord decides to sell up.

What will happen to your lease?

Nothing will happen to your lease during the contractual term. Your landlord’s interest will be sold subject to any existing leases, which means that the buyer will inherit you as a tenant and become your new landlord.

Do the landlord’s obligations in your lease continue after a sale?

If your lease was granted on or after 1 January 1996 your landlord will remain liable for their obligations to you under your lease even after they have sold their interest in the premises.  This is unless:

  • they negotiate a release from liability with you;
  • there is a provision in the lease which excludes liability following a sale of their interest; or
  • you agree to a release under the statutory procedure for release set out in the Landlord and Tenant (Covenants) Act 1995.

Whether a lease contains an exclusion of liability clause will depend on what was agreed when your lease was granted.  If you have taken an assignment of your lease you will need to check the terms to establish if your landlord’s liability has already been expressly excluded following the sale of the reversionary interest.

Your main considerations where a landlord has excluded liability in the lease itself are where they have obligations to repair or to provide services.  Your new landlord will inherit these obligations, and any breaches, and where a new landlord has little or no financial substance this may impact on you.  Such a provision may also have an impact on the commercial value of your lease and the marketability to other tenants if you decide to assign your lease.

Unless a release is granted or obtained, your original landlord will remain liable for the performance of the landlord’s obligations following the sale.  This means that the original landlord and any new landlord will have joint and several liability to you.

If your lease was granted before 1 January 1996 the position is different; the original landlord who granted you the lease will remain liable for the landlord’s obligations throughout the term of the lease and cannot avoid liability by including an exclusion clause in the lease.

How will you know if there has been a sale?

Your new landlord will be under an obligation to give you and any other tenants, notice of completion of the sale confirming the buyer’s name, their contact details and their bank details for payment of rent and any other sums due under your lease.

 

How can Askews help you?

However, if you have any concerns about how a change of ownership might affect you or the value of your lease, Askews Legal LLP has a dedicated team of Property specialists who can assist with any commercial property issues. For further advice or to obtain a quote, please contact Kuljeet Sandhu, Head of Commercial Property or Pritpal Chahal Practice Manager at Askews Legal LLP

 

Askews Legal LLP – Solicitors Coventry.