Legal – What type of occupancy do you require? Ifath Khan Director at Goodman Grant SolicitorsFeatured Products Promotional Features
Posted by: The Probe 2nd August 2018
Many solicitors are currently seeing an influx of instructions from prospective tenants and landlords to establish some form of occupancy arrangements for commercial premises, which includes dental practices. Whether it is as part of a tendering process or simply to cover expansion requirements, some dental professionals are looking at various ways they can occupy premises based on their immediate needs. In order to decide how to best to do this, dental professionals must first have an understanding of the different methods of occupancy available.
Tenancy at will
This arrangement is the most flexible option between a landlord and a tenant. It can be terminated at any time by either party for any reason. A tenancy at will does not create a legal interest in land and, therefore, should only be used on a short-term basis. Tenancies at will are often used where the parties are in negotiation for a lease to be granted for a fixed term and want to document a short-term occupational arrangement, pending completion of the lease.
A licence does not create a legal interest in land. It is simply regarded as permission to use the premises for a particular purpose, and can be for a fixed or ongoing term. A licence does not grant exclusive possession to the licensee (unlike a lease). A licence to occupy can be used in instances where serviced surgery space/office space is made available for a short period, at specified times and dates. It can also be used between exchange and completion of an Agreement for Lease/Contract for Sale, as well as completion of the Lease or Sale, where the tenant or buyer requires access to carry out works, for example.
A licence must be carefully drafted. If the terms of the licence actually make it a lease – in substance – then the courts will treat the agreement as a lease. This creates a risk that any licences which are not correctly drafted and are granted for longer than six months, will be treated as leases and may be afforded all the protection given to business tenancies under the Landlord and Tenant Act 1954. The Act generally grants rights to the tenant to remain on the premises following expiry of the contract, and to request a renewal on the same terms.
A lease is a form of ownership of land. However, such ownership lasts for a specified period of time as usually governed by the terms of the lease. It is a legal, contractual arrangement and an interest in land where the tenant agrees to pay the landlord rent for exclusive occupation of a property for a fixed term. As we have seen, if a person occupies under a lease, they have more protection than one who occupies under a licence. According to the Landlord and Tenant Act 1954, a tenant occupying a property, for the purposes of its business, generally has a statutory right to renew the tenancy at the end of the term (security of tenure) – unless the agreement specifically excludes this statutory right.
With various different ways to occupy premises, it is important for both landlord and tenant to get advice if they are unsure. After all, occupation arrangements must be properly documented, as incorrect drafting could result in an arrangement interpreted by court that would not have been the original intention of one or both parties. It is also imperative that before entering into any arrangements, principal terms are agreed. As a point of reference, the Royal Institution of Chartered Surveyors (RICS) website and the Code for Leasing Business Premises contain useful guidance and model heads.[i], [ii]
In any case, it might be beneficial to seek out guidance from a professional, who will be able to help draft the terms of any occupancy agreement proposed. Goodman Grant, for example, is one of the UK’s leading law firms, made up of a highly experienced team of dento-legal solicitors who can help you navigate the more challenging aspects of the laws surrounding occupancy agreements.
With the support of a solicitor, both landlord and tenant will be confident that they are proceeding with an occupancy agreement in an appropriate way. At the very least, they can take advantage of professional advice to avoid any disputes from arising.
Ifath Khan of Goodman Grant Solicitors – contact on firstname.lastname@example.org
For more information visit www.goodmangrant.co.ukor contact your nearest office:
London: 0203 114 3133
Leeds: 0113 834 3705
Liverpool: 0151 707 0090
[i]RICS. (2018) Professional guidance. Link: https://www.rics.org/uk/knowledge/professional-guidance. [Last accessed: 16.04.18].
[ii]Gov.uk. (2007) Code for Leasing Business Premises. Link: http://www.leasingbusinesspremises.co.uk/. [Last accessed: 16.04.18].
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