Archive for the ‘Commercial Property’ Category

Competition Act Extended to Land

ArcadeThe Competition Act 1998 has recently been extended from 6 Apri 2011 to cover agreements with regard to land. Such agreements were previously excluded.

 
The Act seeks to prohibit agreements, etc. which prevent, restrict or distort competition.
 
The change is important for owners and occupiers of land, because it has been common for agreements (especially tenancy agreements) to contain exclusivity clauses – for example, where a tenant retailer agrees with its landlord that no competitor of the tenant will be allowed retail space in the same development. Such agreements may now be unlawful.
 
Where such agreements are in place, we recommend having them reviewed in order to ensure that they do not conflict with the principles contained in Chapter 1 of the Act. 
 
The Office of Fair Trading has issued guidance on the changes, which can be found here.
 
Contact us for advice concerning the application of the Act in your individual circumstances.

Posted May 13th, 2011 in Commercial Property |

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Indemnity Does Not Give Unlimited Liability

diggerAn undefended claim in damages cannot merely he ‘handed over’ to a person who has indemnified the party settling the claim as a recent case involving a building contract dispute bears out.

 
When a claim was made against a contractor, the claim was accepted by the  contractor’s liquidator. Since there was an indemnity in favour of that company, which was given by another company, that company was sued.
 
In court the judge concluded that while the indemnity was effective, the indemnifying company was not automatically liable for the agreed sum of damages. In order for it to be bound, the company in liquidation would have to prove that it was liable to pay that sum.
 
Indemnities do not necessarily give ‘blanket coverage’. Giving or attempting to enforce an indemnity should only be undertaken with professional advice.

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Posted April 12th, 2011 in Commercial Property |

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Agent’s Acceptance Binds Landlord

To LetA tenant that served a break notice on its lease to the wrong person had a lucky escape recently when the court ruled that the notice was valid because the landlord’ agent had passed it on.
The tenant wished to terminate its lease. During the period of tenancy, the landlord had changed and the tenant mistakenly served the notice on its former landlord. The former landlord advised the tenant of its mistake and the tenant then emailed the notice to the new landlord, which forwarded it to the managing agent.
The managing agent responded to the tenant, indicating that the termination of the lease was acceptable and asking that the notice be readdressed to the current landlord.
The landlord claimed the notice was invalid because it had been sent by email (the lease specified it had to be served it had to be served by hand, by post or by special delivery) and that it was addressed to the wrong person.
The tenant argued that the managing agent’s acceptance of the notice bound the landlord.
The court agreed that sending the notice to the landlord was sufficient to inform it of the tenant’s intention to break the lease, despite it being addressed to the wrong person, and that a reasonable person would accept that it was a notice to break the lease.
On the second point, the court agreed that the managing agent’s acceptance of the notice received was sufficient for the tenant to rely on and acted to prevent the landlord from challenging the notice. A mere acknowledgement of receipt of the notice might not have had the same effect. The landlord was 'estopped' from refusing to accept the notice.

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Posted March 15th, 2011 in Commercial Property |

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Claiming for Dilapidations – some basics

Office ShamblesWhen a lease come to an end, the 'dilapidations clause' makes the tenant liable to restore the let premises to the same state they were in when the tenant first occupied them.
It is established law that when a lease comes to an end, the landlord cannot use the dilapidations clause to make a windfall profit out of a tenant.
This might occur, for example, when the schedule of dilapidations is agreed and payment made, but the landlord demolishes the property in order to redevelop it.
The principles that govern the payment under a dilapidations clause are:
  • The amount of damages has to be assessed on a reasonable basis. The landlord’s intentions for the building are of central importance to this, as an intention to redevelop or demolish the property would probably render the dilapidations trivial. In a recent case, the argument that extensive refurbishment was one of the options available to a landlord was insufficient to dislodge a tenant’s liability for dilapidations since the landlord had other reasonable options for the property and had not yet decided what to do with it.
  • If there is no realistic alternative to demolition or redevelopment, then the fact that the landlord had no settled intention as regards the future of the premises may not have an effect on the assessment of the damages for dilapidations, which would normally therefore be nil or minimal.
  • Where the landlord undertakes a scheme of redevelopment or refurbishment beyond that which the tenant could be expected to pay for, the landlord’s right to reimbursement is limited to what the tenant would have paid to put the premises in reasonable repair as they were previously. The landlord must carry the cost of improvements.
  • If the landlord can prove it would have acted differently if the premises were returned in good repair, it can recover the cost of the dilapidations less the cost of any subsequent work undertaken which would have rendered putting right the dilapidations unnecessary.
  • If the return of the premises in a dilapidated state results in loss of rent, the landlord may claim for the lost rent for any period which exceeds the period the tenant would have taken to comply with the dilapidations covenant, to the extent that the landlord can demonstrate a causal connection between the failure to repair and the loss of rent.

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Posted March 14th, 2011 in Commercial Property |

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Easement Limited to Use

sheepWhen land is used over a long period of time by persons other than the owner of the land, they may acquire an easement (a legal right to use the land). Easements can be acquired by express agreement also. In that case, the terms of use of the land will depend on the agreement. However, when an easement comes into existence as a result of use, the rights of use are less clear.
In a recent case, a dispute arose over the right of way over a private road, which had been used by a farmer for more than 20 years. The court held that the use was effectively unlimited as far as his agricultural purposes went. Since this included driving stock along the road, the owners of adjacent properties opposed it.
The critical point was that although the use of the road by the farmer for pedestrian and vehicular access had been shown to have been permitted for more than 20 years – thus establishing the right of easement – the use for driving stock had not. Since this was more burdensome on the owners of the adjacent properties than pedestrian or vehicular access, the High Court ruled that the right of easement sdid not include the right to drive stock along the road.

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Posted February 26th, 2011 in Commercial Property |

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Letters of Intent – Recommendations

Letters of intent are quite common during contractual negotiations. They can be the cause of legal disputes and in a recent court case in such a dispute the judge made recommedations about their use.

The recommendations are that any letter should:

  • state clearly whether it is intended to be binding or non-binding;
  • state what the rights of the respective parties are in the event that a formal agreement is not subsequently reached. In particular, care should be taken to ensure that the method of dealing with any dispute and the effects of termination are clearly set out;
  • set out whether it is intended to constitute a contract under the Construction Act (and if it is not so intended, care should be taken that the wording does not unintentionally create such a contract); and
  • set out any financial, time or other limits which apply to the work done by the contractor under the letter of intent.

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Posted February 13th, 2011 in Commercial Property |

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Consistency In Planning Decisions Not a Necessity

Just because one planning authority behaves in a particular way, that does not mean another has Craneto behave in the same way. That simple point scuppered a claim by objectors to a property development who contended that on the same facts a different decision would normally have been reached.

Given that there was no procedural error in the way the decision had been reached by the planning officer and the full facts were considered, the planning authority’s reasons for the grant of permission were adequate.
 
The moral of the story is that if a planning permission is to be successfully opposed, the sooner the opposition is organised the better.
 
 

Posted January 25th, 2011 in Commercial Property |

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Eviction of Anti-social Tenants

Block of flatsThe Government is to take action to make the process of evicting anti-social tenants quicker, it was announced today. Anti-social behaviour is a serious problem where it occurs and harassment by neighbours blights the lives of some social tenants. The process by which the landlord can evict tenants responsible for anti-social behaviour can often take years.

Under the proposals, judges will have the ability to order the eviction of tenants who have been the subject of an anti-social behaviour order (ASBO). When evicted, the tenant will be regarded as intentionally homeless, negating their right to demand that the council re-house them.

The main purpose of the new approach is said to be deterrence, in that the threat of being homeless is thought likely to exercise a moderating influence on anti-social behaviour.

If you have any landlord and tenant iassues, please contact us.

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Posted January 19th, 2011 in Commercial Property |

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Furnished Holiday Lettings – Tax Changes Confirmed.

From April 2011
Loss relief will be restricted. From April 2011 property owners will not be able to transfer losses against other income sources. Losses will only be available to carry forward and set off against profits from the same property letting source.
Country Cottage
From April 2012
  1. To qualify for FHL status, property must be available for letting for 210 days (previously 140 days), and actually let for 105 days (previously 70 days).
  2. The present treatment of capital allowances and capital gains tax is to remain unchanged.
  3. To reduce uncertainty, property businesses that meet the revised occupancy rules in one year may elect to be treated as if they met the rules in the following two years as long as certain criteria are met.

For more information click here: for advice, contact us..

Posted January 8th, 2011 in Commercial Property |

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What Constitutes a Change of Layout?

The question of just how far a lessee can go in altering the layout of a property without either the landlord’s consent or breaching other terms of the lease can be a vexing one. The 2006 case of Waycourt Ltd. v Viscount Chelsea looked at the issue of what constitutes a ‘change of layout’ for the purposes of a prohibition on changing the plan or internal layout of premises under a lease.


The property in point consisted of two substantial terraced houses, in Sloane Gardens, which had been divided into flats with a basement area comprising a caretaker’s flat and two subterranean storage vaults. The basement flat consisted of a kitchen-diner, a bedroom and a bathroom. The flat was too small for the caretaker and her family and so her husband altered the premises, converting the two vaults into a kitchen and dining area.


There was a complaint by the landlord that the caretaker had altered the layout of the basement by the conversion works and that this was in breach of the lease. The caretaker claimed that the landlord’s consent had been unreasonably withheld and that she had not herself been in breach of the covenant ‘not to alter the plan layout height or elevation of the demised premises’.


The Court of Appeal agreed with the judgment of the lower court, which ruled that the change in the internal arrangement of the premises did constitute a change in layout and that the caretaker was in breach of the covenant in her lease.


Tenants who are considering making internal alterations to their premises, such as removing walls or making new door openings, should take this decision as a warning to ensure that they are within their legal rights before undertaking building works.

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Posted January 5th, 2011 in Commercial Property |

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