Archives for October 2013

Break Clauses – Get it right first time

Many commercial leases include break clauses allowing the tenant to bring the lease to an end before the contractual term ends. These give tenants flexibility from being tied into a long term. In the recent economic downturn tenants have been attempting to exercise break clauses to release themselves from leases with upwards only rent reviews or other obligations that landlords used to be able to impose.

Some of these attempts to escape have come unstuck. Even very minor failures of no commercial value may block a break. There have been many court cases recently about whether or not break clauses have been effectively operated.

This is a high risk area for any business. If you plan to break your lease but don’t get it right you don’t get a second chance. You may be stuck for several more years with an obligation you have decided to get rid of and possibly two sets of premises. For landlords the stakes are equally high;  they and their lawyers will go over any attempt to operate a break clause with a fine toothcomb.

The Code for Leasing Business Premises in England and Wales recommends that the only pre-conditions to a tenant exercising a break clause should be that they are up to date with the main rent, give up occupation and leave behind no continuing sub-leases. In practice many older leases include other pre-conditions which can be a trap for tenants.

Any tenant considering exercising a break clause should plan ahead. The starting point is to look at the lease:

  • When is the break date ?
  • Notice will have to served – often several months in advance. What is the last date on which notice can be served?
  • Is there a specified form for the notice or is there specified information to be given ?
  • What does the lease say about serving notices? Who is to be served? Where ? How?
  • Are there any pre-conditions for exercising the break clause, and at what date do they have to be satisfied?
  • Rent will almost always have to be up to date, but that may include other payments defined in the lease as rent. Have you ever been late paying something and triggered an obligation to pay interest reserved as rent? There has been much litigation about what to do when rent is due for a period which continues beyond the break date. The basic advice is to pay everything that is due and try to get it back afterwards. The loss of a quarter’s rent is far less than being stuck with rent for several more years.
  • Is there an obligation to have complied with all the tenant’s obligations in the lease? At what date? Is that qualified by the word “material”? If not, even minor, previously unnoticed breaches may block compliance. If in doubt comply. Obligations as to the state of the premises on termination may be scattered throughout the lease. Can you identify tenant’s fixtures or alterations which you should remove? Aim to get work done well in advance of the break date and allow a margin for delays. Try to get the landlord to approve them.
  • You must give vacant possession – be very careful to do exactly that. Contractors still on site doing repairs, or even rubbish in the basement, have prevented tenants from meeting this obligation in recent cases.

Unless you are absolutely sure you understand everything you have to do get legal advice, and get it early. Deadlines for break clauses are absolute and if you miss them even the best lawyer in the land won’t be able to help you. You may be able to do a commercial deal, but from a position of weakness. With some other issues it may be possible to litigate whether you have complied or not, but this will be substantially more costly than getting early advice and getting it right first time.

Finally, when taking on new premises look carefully at any break clause – if you can’t make it unconditional, negotiate for it to comply with the Code for Leasing Business Premises.

Free employment advice service from ACAS

You don’t always need to pay for help with legal problems. Harris & Harris is always here – it may be cost effective to pay us for advice if the issue is serious or complex. However, there is free help available about employment problems from Acas, and they offer guidance on many everyday employment law issues.

Acas have a free online advice service for employers and employees who want answers to work related questions. It’s a good place to start. Sometimes Acas will give you the reassurance you want. If they can’t that’s the time to contact us. Acas will usually recommend that you get legal advice if they think you will need it.

Acas Helpline online offers 24 hour free advice and guidance on rights at work and employment law. Employers, employees and HR managers can receive an instant response to their work related questions and the service can help users feel more informed before a conversation with an Acas helpline adviser.

Helpline online answers over 600 of the most frequently asked workplace questions on topics ranging from maternity and family friendly rights to absence and bullying and harassment.

Available since June 2013, employers and employees have already used the service over 50,000 times. The top three questions so far are:

  • How can an employer change the terms of a contract when an employee does not agree to the change being made?
  • How can an employee raise a grievance?
  • What are the different types of dismissal?

The Acas Helpline team develop and improve the content to reflect the feedback received.

Acas Chief Executive, Anne Sharp, describes it as being an addition to their range of workplace advice services. To access helpline online visit www.acas.org.uk/helplineonline. You can also speak to an Acas helpline adviser on a whole range of workplace issues on 08457 47 47 47 from 8am – 8pm Monday to Friday and 9am-1pm on Saturday.

If you need more than Acas can provide please contact Neil Howlett or Andy Hambleton.

Make a Will, make a difference

Harris & Harris is pleased to announce that we will be taking part in Will Aid’s 25th anniversary Make a Will Month this November.

During November, we will waive our fee for drawing up a basic Will and instead invite our clients to donate to the Will Aid group of charities. The suggested donation is £90 for a single basic Will. The money raised will be shared by the nine Will Aid charities* and is used to transform the lives of people in the UK and around the world. Over the past 25 years, Will Aid has written over 250,000 Wills and raised £13.6m in charitable donations.

Having an up to date and properly written Will is the only way to be sure that your money and possessions will be distributed according to your wishes. It is also the only certain way to avoid difficulties for your relatives and friends after your death. By making a Will with Will Aid you will be protecting your loved ones’ future and helping to raise money to support the vital work of the Will Aid charities.

For further information or to make an appointment to make a Will please call either our Wells or Frome office.

Together we can make a real difference to your loved ones security in the future and at the same time help the thousands of people in the UK and around the world helped by the Will Aid charities.
*The Will Aid charities are: ActionAid, Age UK, British Red Cross, Christian Aid, NSPCC, Save the Children, Sightsavers, SCIAF (Scotland) and Trocaire (N. Ireland).

 

Our Wills Specialists:-

Caroline Fletcher at our Frome Office

Annemarie Swainson or Joshua Eva at our Wells Office