Sharing Occupation - Case Study
The People
Our client, an accountancy partnership, instructed us in the sale of its insolvency division.
The Problem
The proposed timing of the sale meant that the there would be a period when the division (under new management) would need to carry on trading from the same office premises. We were asked to therefore grant a licence for occupation to cover the required three month period.
Unfortunately, the headlease provided that no sharing of occupation or licence was permitted and any grant of occupation could only be by a permitted sublease which would require a deed of covenant to be entered into by the subtenant with the landlord. Not only did this seem a fairly heavy handed way of dealing with what was to all intents and purposes a very short term occupancy, it would also cause delay in obtaining the head landlord’s licence to sublet.
The Solution
Our client was looking for a practical way forward. We discussed achieving this by our client and the new partnership entering into an agreement for lease, conditional upon the landlord’s licence to sublet but which allowed early occupation. This would include a long stop date of three months and, of course, there would be no intention that any application to sublet would be made. In addition it would acknowledge the subletting provisions in the headlease. We cautioned our client that the occupation permitted under the agreement would still be, in essence, a breach of the terms of the headlease but the risk of any valid action by the head landlord within the three month period was recognised as small and one that the client was prepared to take in all the circumstances.
The Postscript
While always properly advising clients of the legal implications, sometimes it is necessary to consider a situation from a different perspective to reach a more practical solution.
Who to contact
Roderick Campbell
Partner, Head of Commercial Property
Email
Request a callback