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INSIGHTS

CERTANTY

It’s something that is fundamental to business and in particular to owners of commercial property. Without it you simply cannot truly rely on the other party (in this case a tenant) doing what they said they would do.
So how do you obtain certainty in the context of a commercial Lease? The only way is to ensure that all of the paperwork is in order. That means correctly prepared and properly executed Lease documents as well as correctly prepared and properly executed Extension of Lease documents. And that means no verbal agreements as well as not relying on Letters of Intent, an exchange of letters or emails or similar documents.

Which raises the issue of whether an exchange of letters or a series of emails is sufficient to bind the parties and to provide that certainty.

Over the years I have had this discussion with a number of clients who have asked their solicitors and other advisers whether they could hold the tenant to what they believe they had agreed to. Generally, they were told that “they have a very strong case􏰀” or even “definitely, no doubt in my mind based on the information you have given me”.

So the client comes away with the impression that they are protected and could sue the tenant if needs be. This may well be the case but the problem is that when it gets before a Magistrate, there is no guarantee that the court won’t see things differently after hearing the tenants side of the story. In which case it’s often too late. Often the Magistrate will just make an order that the parties execute a formal Lease or Extension document in which case you still have the cost of document preparation but you also have the additional cost of going to court.

So even though you have been told and may believe that you have ‘a very strong case’ or even ‘I have no doubt in my mind’, until the matter has been before a Magistrate you just can’t be 100% certain.
The ONLY way to achieve that true certainty is for the appropriate paperwork (whether it is a Lease document or an Extension of Lease document) to be prepared by someone who knows what they are doing and for it to be properly executed by all parties.

Anything less must raise some doubts and accordingly does not provide true certainty. 
Steve Evans

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