It is not enough for a landlord to have a well written lease which imposes multiple obligations and penalties on a tenant. The landlord must also be vigilant in their daily dealings with the tenant or else the advantages under the lease will be lost.
The key driver for landlords is maintaining the income stream from their property. Where a tenant has a good track record of paying on time and looking after the property the landlord will think them reliable and is unlikely to be concerned if the tenant mentions they would like to, or possibly already have, carried out alterations.
This can be a huge trap for the commercial landlord.
Two particular situations can occur: the tenant has already done the work and the local authority or the landlord objects to it; alternatively, the tenant asks for formal licence, carries out the work but never provides the landlord with the necessary evidence of statutory compliance and the licence never completes. The effect of both of these situations is the same: the alterations are unauthorised.
In a worst case scenario, making alterations to a leasehold property which are unauthorised can lead to enforcement notices and criminal proceedings by the local authority against both the landlord and the tenant. The landlord may find that their tenant suddenly disappears and they are left with expensive remedial work to remove those alterations.
The lease will say the tenant cannot carry out alterations without the landlords formal consent, the tenant must comply with all laws and the tenant will pay the landlord for all costs and liabilities incurred due to anything the tenant does.
At first sight, the landlord has many remedies where a tenant breaches their obligations. Or so it seems. The landlord can take the lease away (forfeiture); make the tenant remove the works (an injunction); or claim for damages.
The landlord of the commercial property may well think they are protected because of these remedies but the moment the landlord finds out about the unauthorised alterations the clock starts to run against them.
It’s very easy for a landlord to accept rent when it is paid into their account by monthly or quarterly standing order (and why wouldn’t a landlord want to accept it?) However, if the landlord accepts rent after finding out about the unauthorised alterations they have waived their right to forfeit and the only remedies available then are damages and / or an injunction.
Damages are only as good as the tenant’s ability to pay them.
A request for alterations or retrospective consent for them should always be handled with extreme caution. Faced with such a request a landlord should take legal advice straightaway.
For more information about your rights as a commercial landlord, please contact us on 01483 887766, email us or via live chat.
This is not legal advice; it is intended to provide information of general interest about current legal issues.