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Unwritten Commercial Leases

A tenancy agreement doesn’t need to be in writing to exist – all it takes is for the freehold owner to let someone move into the premises and allow that person control over the premises.
Usually what has been agreed at that point is only the amount of the rent and how frequently the rent is to be paid. But there are many other issues that should be resolved: exactly what is the extent of the premises – does it mean the entire structure?  Is it internal only?  What about the windows and doors?  What should the landlord insure and what should the tenant be responsible for?  Who pays?
That doesn’t mean that obligations don’t exist but in the event of a dispute it would be difficult for either the landlord or the tenant to prove what was agreed.
When the tenant is trading from the premises, the Landlord and Tenant Act 1954 is relevant: both parties can apply to court to set out the terms of the tenancy.  The tenant is protected to a certain extent as the landlord can only kick the tenant out under certain specified circumstances.
There is one way the landlord can weaken its position without even being aware of having done so: if a landlord lets someone into the premises and takes money from a Mr Jones, that Mr Jones will be liable for the rent. A few months down the line, Mr Jones transfers his business to his limited company and starts paying rent through the limited company.  Without realising the landlord has allowed the tenant to be the limited company so if the business and limited company goes bust, Mr Jones can walk away without liability.
That is why it is always recommended that you seek advice before letting a tenant into occupation or if you are a tenant, before you move in. If you have a tenant already in occupation, please always check who is paying the rent.

For any advice on Tenancy Agreements, call our Commercial Team on 0800 088 6004