Commercial Property Licences – What to Consider?

If you’ve ever had the experience of leasing any property you will know how important it is to have everything in writing.

Especially when it comes to leasing commercial properties.

One of the most important legal documents that landlords and tenants will sign is the commercial property licence agreement. This agreement sets out the terms and conditions of the lease and helps to ensure that both parties are clear on their responsibilities and obligations.

If you are a landlord or tenant looking to enter into a commercial property licence agreement, there are several important guidelines that you should be aware of.

Here are some key points to consider when drafting or reviewing such an agreement:

Clearly define the premises

The premises should be clearly defined in the agreement, including any common areas or amenities that are included. This helps to avoid any confusion over what spaces are included in the lease.

Set the term of the lease

The terms of the lease should be specified, including any renewal options that may be available. This ensures that both parties are clear on the length of the lease and when it will expire.

Detail the rent and payment terms

The rental amount should be specified, how it will be calculated and when it is due. It should also outline any penalties for late payments.

Spell out permitted uses

Permitted uses for the premises should be clearly defined. This may include restrictions on how the space can be used or requirements for obtaining permission before making changes to the space.

Outline maintenance responsibilities

The agreement should specify which party is responsible for maintaining the premises, including repairs and maintenance. Any disputes over who is responsible for fixing issues that may arise during the lease will then be handled more easily.

Address insurance requirements

Any insurance requirements for the premises should be defined, including liability insurance and property insurance. It should also outline who is responsible for obtaining and maintaining this insurance.

Set guidelines for termination

The circumstances under which the lease can be terminatedneed to be specified too, including any notice periods that must be provided and fees for terminating early.

Address dispute resolution

How disputes will be resolved should be defined, including any arbitration or mediation procedures that may be required.

Include any additional terms

Additional terms that are specific to the landlord or tenantcan be included, such as options to purchase the property or requirements for subletting.

Ensure compliance with local laws

It is important to ensure that the agreement complies with all applicable local laws and regulations. This may include zoning laws, building codes, and licensing requirements.

You’ll also want to make sure you are aware of the difference between a lease and licence.

Where a lease differs from a licence is in the rights, obligations and protections it gives to the tenant. 

For instance, a lease can be bought and sold, while a licencedoesn’t give tenants any proprietorial rights.

Confusing a lease with a licence can lead to disaster. For example, a tenant may find their licence terminated with minimal notice or tied into a long lease when they’re needing to vacate sooner.

In the end, the commercial property licence agreement is a critical document for both landlords and tenants when leasing commercial properties and needs to be drawn up with care.

By following these guidelines and ensuring that the agreement is clear, comprehensive, and compliant with all relevant laws, both parties can avoid disputes and ensure a successful leasing experience.

Of course, if you are in need of further guidance on this topic, please feel free to get in touch with Robert or one of the team. As property solicitors in Surrey we always aim to provide great service locally in Chipstead and surrounding towns.

#commercialpropertylicense #commercialproperty #propertylicenseguidelines