Author: Roland Brandman
A practical problem which has befallen many an occupier: you have found a new unit for trading and agreed heads of terms with the landlord; the lease and licence for alterations are being negotiated via solicitors; you now need to go in and start trading; however, the landlord will not give you the keys until the lease documentation is completed. A high-trading period may be on the horizon and you stand to lose potential profits. Perhaps you have booked suppliers to deliver stock or contractors to start your fit out based on when you expected the lease to complete, and now you face the prospect of being charged for the delay.
One point (often noted in hindsight) is that that guesses of time scales for completion may prove wrong. Leases and related documents can take time to get completed, even if you have urged your solicitor just to get the job done; unexpected delays can arise from either side. So you might well avoid booking in contractors to start on a particular date as you run the risk of them turning up on the doorstep without being able to get in (and charging you by the hour for their time).
Another point is, of course, to make sure that you are doing what you need to on your side to avoid potential delays to completion. Whilst this sounds obvious, other units and business concerns may have diverted attention and little more may have been done to progress matters with the landlord itself than chasers to the solicitors. For example, you may well not want to complete your lease of the unit without completion at the same time of a licence to alter which provides the landlord’s consent to your fit out. A licence for alterations needs proper drawings and a specification detailing the works and the landlord will want time to consider and make comments on these, so make sure you provide them early to the landlord and chase for approval.
If, however, you do find yourself up against it time-wise, a possible route to get you into the premises without a lease completed is an early access letter. This is a letter where the landlord permits a proposed tenant to enter on a mere-licensee or key-only basis pending completion of the lease. It sounds like an easy option, but there are issues. For example:
Early access letters are not an attractive fall-back option. They can be a recipe for disaster given that an occupier can be left high and dry without a unit even after moving in and incurring costs on it. It is better to put efforts into progressing on the agreement and signing of the lease and related documentation, and to building allowances for delays into moving plans and forecasts, to help avoid the situation where an early access letter becomes a necessity.
Roland Brandman, Associate, Fladgate LLP (firstname.lastname@example.org)