Commercial Property ‐ FAQ

Exercising break options

Many Leases contain break options within them by which either the Landlord or the Tenant can bring the Lease to an end earlier than at the end of the term.

Break clauses can be for the benefit of Landlords or the Tenants although most tend to be for the benefit of the Tenant.

How do I exercise the break option?

The first thing is to check your Lease or arrange for your Solicitor to do so. Some break clauses are personal to the original Tenant and therefore if the Lease has been assigned to you then you might not have the ability to break the Lease.

Many Leases only allow the break to be exercised on a specific date and nearly all require a specified period of notice to be served prior to the break date. Time will be of the essence and therefore the timescales need to be strictly complied with. Always leave yourself plenty of time to serve your break notice rather than leaving it to the last minute and then potentially missing your break date.

Are there any conditions to the break?

Break clauses often have conditions to them. It is usual for there to be a requirement that all rent is paid up to date at the time that the notice is served and when that notice expires. Tenants should be careful to check their Lease as to whether there also needs to be compliance with other covenants. If so, ensure that those covenants have been complied with before exercising the break. Some break clauses may require reasonable or substantial compliance with those covenants. In which case minor breaches should not prevent you from breaking the Lease.

What are the requirements for serving the break notice?

Once again, check your Lease as to whether there are any specific requirements as to the service of the notice including on whom it needs to be served and the method of delivery. Are you sure of the correct address for the recipient? Do you need to consider postage times? To be more certain of safe service of the Notice, arrange for it to be hand delivered.

This guide is merely a summary of the issues that might relate to a break clause and we would always advise that you obtain legal advice as early as possible.

How long will a property transaction take?

This will depend upon the type, size and complexity of the transaction. More importantly it will depend on how quickly both parties want to get the matter finalised. We will be able to estimate such timescales at the beginning of a transaction and will always make every effort to complete the transaction.

How much will the transaction cost?

From the outset we discuss with you the fees we expect to charge which will depend on the type of transaction. We offer a competitive service and will give you details of hourly rates and all expected legal costs, including search fees, Stamp Duty Land Tax and Land Registry fees. Where you are buying, selling or leasing a proprty, we will give you an estimate of our fees in advance and will do our upmost to work to that estimate, not beyond it.

What are the property searches?

When purchasing or leasing a property, we would recommend that you carry out the property searches as early as possible and we can do this on your behalf. The searches are made up of the following:

Local Authority Search

This is a set of enquiries raised with the Local Authority covering a wide range of subjects. The search will include the following information:

  • Details of planning permissions granted in respect of the property together with Building Regulation Consents, Listed Building Consents and Conservation Area Consents. Furthermore, if enforcement action has been taken by the Local Authority in respect of planning or building Regulation matters, details of this will be set out.
  • Whether the road adjacent to the property is maintained at public expense as a highway or whether it is subject to an adoption agreement.
  • Whether the property is required for public purposes or is to be acquired for roadworks.
  • Whether there are any drainage agreements for consents which affect the property.
  • Whether there are any nearby road schemes within 200 metres of the property which will include new trunk roads or road improvements.
  • Information as to new traffic schemes such as stopping up orders, diversions, waiting or loading restrictions, one way systems, traffic calming or pedestrianisation.
  • Whether there are any outstanding notices in respect of building works, environmental matters, health and safety, housing, highways or public health.
  • Whether a Compulsory Purchase Order has been served in respect of the land.
  • Whether the land is the subject of a Contaminated Land Notice or is registered under the Environmental Protection Act.
  • Optional questions which include whether the property is affected by public rights of way.

Drainage and Water Search

This search identifies and checks the details of the water and drainage services at the property and confirms whether the property is connected to the public water supply and drainage system. It also:

  • shows the location of public water mains and sewers in the area;
  • identifies the existence of any agreements or consents relating to the water services;
  • provides information on the risk of internal sewer flooding which might result from overloaded public sewers nearby;
  • provides an analysis of the risk of receiving low water pressure together with possible remedial measures;
  • provides the location of nearby sewerage treatment works;
  • provides information as to the basis upon which water services are charged to the property;
  • provides an assessment of water quality.

Environmental Search

These are a desktop study of any environmental risks which could affect the property. This then enables you to assess whether there are any risks which might change your decision as to whether to proceed with the property transaction. The information provided by such searches are as follows:

  • A professional opinion by a firm of chartered surveyors on the level of environmental risks associated with the property and the likelihood of the property being described as contaminated under the terms of Part II A of the Environmental Protection Act 1990.
  • An additional surveyor's report which suggests the next steps if such risks are identified.
  • Details of past and present industrial use.
  • The location of nearby landfill and waste management sites.
  • Details of consents to discharge that may have been granted in the locality.
  • Confirmation as to whether the property is in or is close to a radon affected area.
  • An indication from the British Geological Survey regarding the risk of natural ground stability and instability caused by mining.
  • An assessment of flood risk including surface water, tidal flooding and information regarding flood defences.

Chancel Search

Some properties are within a parish that retains the potential for the church to charge for the cost of repairing the church chancel. The Chancel Search will identify whether there is any potential liability within the parish for such repairs. One couple were made responsible for a claim of £230,000.00 in respect of the cost of repairing a nearby church. They fought the claim and unfortunately lost and incurred legal fees of some £250,000.00 as a result. Sadly, they had to sell their home to pay the costs. Unfortunately, such searches only confirm if the parish has a liability, not the property itself.

Land Registry Search

This checks whether a specific property register at the Land Registry has changed since the time the register was last viewed by way of office copy entries.

What does commercial property include?

All types of land and premises including offices, shops, hotels, residential/nursing homes, industrial and warehouse facilities. It can also include the acquisition and sale of development sites for both residential houses and flats and commercial premises i.e. shops and offices etc.