Coronavirus and commercial leases – what landlords and tenants need to know

Can tenants withhold rent or end a lease prematurely?

A common question is whether tenants can refuse to pay rent, pay less rent or terminate the lease before the expiry date.

Firstly, it is important to review the terms of the lease. The relevant provisions to consider include:

  1. Any break clause that may enable the tenant to terminate the lease early;
  2. Any force majeure clause (although these are rarely found in commercial leases and there is no common law right to terminate for force majeure); and
  3. Any turnover rent provisions that are dependent upon the income generated from the premises.

Most commercial leases will provide for rent to be payable without deduction or set off. In those circumstances a tenant is unlikely to be able to withhold payment of rent for Coronavirus-related reasons unless any specific provision in the lease enables it do so, or unless it reaches an agreement with the landlord.

Rent suspension clauses generally only apply where premises have been damaged or destroyed. Tenants may therefore struggle to argue for a rent suspension in reliance on such provisions.

Tenants may look to the common law doctrine of frustration where the lease provides no express option for early termination. To terminate a lease by frustration, a party has to prove that there is some form of illegality or failure of common purpose that renders performance of the lease/contract impossible or so radically different from the parties’ expectations that termination is justified. The bar for a successful frustration claim is high.

 

Can a Landlord forfeit the lease and evict the tenant for non-payment of rent?

The UK government announced on 23 March 2020 that commercial landlords are to be precluded from forfeiting commercial leases and evicting the tenant for non-payment of rent. This measure has been extended from 30 June 2020 and will remain in place until 30 September 2020.

 

Who will be liable to provide/pay for additional services?

The starting point is that landlords remain liable to provide, and tenants remain liable to pay for, services in accordance with the express service charge provisions in the lease.

The ability of a landlord to recover the costs of the enhanced cleaning regimes from tenants will depend on the terms of the lease. Most service charge provisions include the recovery of cleaning costs and we would anticipate that such costs would be likely to be seen by the courts as reasonably incurred subject to any cap that may apply. Alternatively, a landlord might be able to rely on any ‘catch all’ provision regarding costs associated with good estate management.

 

Whether you are a landlord or tenant, it is important to understand your legal obligations and commitments; to act responsibly and not to assume that you are or will be automatically released from your legal obligations under a lease.

 

For further information, please contact our Commercial team at MBH Solicitors:
http://www.wigansolicitors.com Tel: 01942 206060 Address: 26 Bridgeman Terrace, Wigan WN1 1TD.

 

What is a No-Fault Divorce?

The no-fault divorce bill has now been passed by parliament and has since attained royal assent on 25 June 2020. It is anticipated to be implemented by Autumn 2021.

The need for reform has been the view of many lawyers for years however, more recently, in the case of Owens v Owens [2018] UKSC 41, it was the case that the need for reform was suddenly brought into focus. In this case, Mrs Owens filed a divorce petition on the basis of unreasonable behaviour. Mr Owens managed to defend such allegations, therefore leaving Mrs Owens to remain unhappily married until the time came whereby Mrs Owens could file for a divorce on the basis of 5 years separation without consent.

The current divorce legislation is extremely outdated and contested by many. Resolution, mainly run by a group of family lawyers, have campaigned for a number of years for a no-fault divorce to be introduced on the basis that current legislation is causing further animosity between separating couples. Unless the parties have been separated for a period of two years, and consent to the divorce, or a period of five years if the Respondent does not consent, the Petitioner must essentially blame the Respondent for their actions, as the reason to why the marriage has irretrievably broken down.

The new bill will not change the fundamental principle, but will change how this principle must be established.

Presently, there are 5 factors that can be shown to prove the ground of irreconcilable breakdown of a marriage. These are as follows:

  • Adultery and Intolerability
  • Behaviour (which you find unreasonable)
  • 2 years desertion
  • 2 years separation with consent
  • 5 years separation without consent

It is often the case that many separating couples use behaviour to enable them to get Divorced quickly and to assist them in resolving their financial dispute. There is often a view that bad behaviour will have an impact upon and will be taken into account when calculating a financial settlement between the parties. This is very rarely the case. It is often viewed that blame upon another will be a distraction for the parties and the idea of blaming another may also have an impact upon the children and any future contact arrangements. The no-fault legislation aims to limit such conflict between the parties to ensure the focus remains on reaching a resolution as quickly and amicably as possible.

In the past, Divorce was looked down upon and was extremely rare. However, more recently, relationship breakdowns are considered one of life’s realities, leaving more and more couples separating on a daily basis. The new changes will hopefully mean that this will become easier for couples to separate amicably and without blame (where appropriate).

Key changes to be implemented in the new legislation

  1. No more statement of case

This amendment will remove a major amount of animosity and conflict alone. Within the current divorce petition, when the Petitioner is to use the fact of unreasonable behaviour or adultery and intolerability, a statement of case must be produced. This consists of a number of small paragraphs as to the Respondents actions during the relationship which have resulted in the Petitioner unable to remain married to the Respondent. The new bill will remove this section entirely and will allow couples to apply jointly for a divorce, and should this not be consented, will still allow one party to apply solely.

  1. Removes the ability to contest a divorce

Given the fact no evidence is required to stipulate the relationship has broken down, and the parties/party must instead make a sworn statement that the marriage has irretrievably broken down, the Court is expected to take the statement as conclusive evidence to make an Order.

Presently, it is often the case that although being ‘blamed’, parties will agree to the wording of the statement of case. This, in essence, reduces the amount of contested applications.

  1. Time lines introduced

The new legislation will introduce a 20 week period between the filing of the divorce application, and obtaining the ‘conditional order’ (the Decree Nisi). It shall remain the same that from the first stage (Decree Nisi) until the second stage (Decree Absolute) the parties must wait at least six weeks and one day from the date of the conditional order before filing for the final divorce order.

The new minimum period to obtain a divorce has been increased by three months, and the reason to do this was allow parties to reflect on their marriage and whether the marriage can be reconciled. Lawyers do however, continue to raise questions in this regard and state that the decision to divorce will require reflection and thinking.

Our thoughts

The new no-fault divorce is most definitely, a step in the right direction. It is still the view by many, however, that there is much further to go. It is noted that there is still very little protection for cohabiting couples and other diverse family types.

Should you wish to discuss matrimonial matters with us, please contact Gillian Lavelle or Megan Brookfield who will be happy to assist you.

Temporary SDLT Relief for residential properties

On 8th July 2020 the Chancellor of the Exchequer announced a temporary holiday for SDLT on the first £500,000.00 of all property sales that take place in England and Northern Ireland between 8th July 2020 and 31st March 2021.

The SDLT holiday was introduced to encourage buyers to continue with their house purchases in a bid to keep the property market moving during these turbulent times. The hope is that, following the decrease in property transactions during lockdown, this will boost the property market which in-turn will assist with the recovery of the UK economy.

But what does this mean for you and how much could you potentially save?

For first time buyers, this now means that you can purchase a property up to £500,000.00 and pay no stamp duty. The previous threshold for first time buyers to claim the FTB Relief was £300,000.00 with any consideration between £300,000-£500,000 attracting stamp duty at 5% i.e. first time buyers purchasing a property at £500,000.00 can now save £10,000.00 under the temporary relief rules. First time Buyers purchasing above £500,000.00 were not entitled to FTB SDLT relief under previous rules.

For anybody thinking of moving home and replacing their main residence, there will be no SDLT to pay on property purchases up to £500,000.00. If you are purchasing a property above £500,00.00 SDLT will be paid on a sliding scale for anything above £500,001.00 (i.e. 5% for any consideration between £500,000.00 and £925,000.00, 10% on any consideration between £925,001.00 and £1.5m and 12% on any consideration paid above £1.5m. The new SDLT relief could therefore save you up to £15,000.00.

What if you wish to purchase an additional property i.e. buy to let property or second home? Under the new SDLT Relief rules, you will now only pay 3% on anything up to the value of £500,000.00. Previously you would have paid 3% up to £125,000.00, then 5% on any consideration paid between £125,001.00 and £250,000.00 and 8% on anything between £250,001.00 and £925,00.00 and so on. i.e. under the previous rates you would have paid £30,000.00 SDLT on an additional property purchase at £500,000.00 but under the new rules you will now only have to pay £15,000.00.

The new relief does not only benefit individuals but also companies purchasing residential properties can also benefit from the same savings when purchasing a buy to let or additional property.

For anyone considering purchasing a new residential property prior to 31st March 2021, you can use the Government calculator (copy the link below into your search engine) to check exactly how much SDLT is payable dependant upon your circumstances.

Government SDLT calculator: https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#/intro

For any further information or property advice, or if you are thinking of taking advantage of the temporary SDLT Relief by purchasing a new property, please contact us for a competitive quote either by telephone (on 01942 206060) or email at mbh@wigansolicitors.com

Land Registry Update – Electronic Signatures

When buying a house, one of the most significant moments for the parties involved is the signing of the contract documentation. Until recently, the Land Registry would only accept the original “wet” signature to the documentation to reduce the risks of fraudulent transactions.

However, due to the recent lockdown restrictions, wet signatures have become increasingly more difficult to obtain due to postal delays, a solicitor’s inability to see their clients in person and difficulties with printing and scanning. This led to an increase in demand for the Land Registry to accept electronic signatures.

As a result, the Land Registry are now accepting electronic signatures however the signature must be witnessed by another party who is a present at the time of signing who will also have to sign the document electronically.

Not only will this help in the current climate, it is also a strong step towards modernising legal processes and keeping up with technological advances. It will also ensure that solicitors can work with clients over long distances as they will be able to correspond via email and finalise the transaction without relying on the postal service or having to travel long distances.

The hope is that, in the near future, electronic signatures will become more commonplace which will significantly modernise the conveyancing process and help to keep legal transactions up to speed with technological advances.

Retirement for Paul Aynsley

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McCarthy Bennett Holland Solicitors (MBH) would like to announce the retirement of their senior Partner, Paul Aynsley as from 1st May 2020.  We are sad to see him go but wish him all the best in his retirement.  Paul was a key member of MBH for over 27 years and has an excellent reputation and standing in the community.

As most of Paul’s clients will be aware, Darren Earnshaw joined us in February 2020 and has worked side by side with Paul over the last few months.

Paul Aynsley said “After nearly 27 years with the firm it is a big change for me to be leaving but I know am leaving the department in Darren’s very safe and vastly experienced hands. The department will continue to go from strength to strength and has a very exciting future ahead. Darren is hugely talented, dedicated and knowledgeable in whom I have the utmost confidence and trust to deliver the best possible advice on litigation and private client matters.”

Caroline Rooks, Senior Partner, paid tribute to Paul:

“Paul has been an outstanding partner for the clients of MBH Solicitors and has delivered exceptional service to the firm. Paul has had a huge influence on everyone here at MBH Solicitors and thanks to his guidance, friendship and expertise we are able to build on all he has achieved over a long and highly successful career. On behalf of the whole firm, I thank him for all that he has given to us and our clients over the years”.

About MBH Solicitors

MBH Solicitors has been in business since 1971 and has a widespread and diverse client base. The firm is forward thinking and offers electronic or traditional ways of conducting your case.  A modern approach is taken to ensure that you are provided with an efficient service.

MBH offer the following services:

  • Commercial Advice & Litigation
  • Commercial Property
  • Company Share Sale & Acquisition
  • Landlord & Tenant
  • Commercial Leases
  • Business Acquisition & Sale
  • Shareholder Agreements
  • Wills & Probate (Estate Management)
  • General Litigation & Dispute Resolution
  • Personal Injury & Clinical Negligence
  • Residential Conveyancing
  • Family, Children & Divorce Law
  • Employment Law

MBH’s prices are competitive and fixed fees can be offered where appropriate.

Contact MBH Solicitors on 01942 206060 or by e-mail to mbh@wigansolicitors.com.  For further information please visit our website www.wigansolicitors.com

Update on Covid-19 and Compliance with Child Arrangement Orders

It is understandable that parents have been extremely concerned about adhering to Court Orders during these unprecedented times, and of course, when they will next be able to see their children.

The Government Guidelines are rapidly changing, and new rules are put in place to ensure the safety of each person, and to attempt to relieve the strain from the NHS.

Each family’s circumstances will differ. The Guidance below is general and has been released as a guideline for separated families to consider when making the necessary decisions about contact arrangements.

 

  1. Parental Responsibility lies with the Mother, and the Father (who is named on the birth certificate, or married to the Mother, or has a Parental Responsibility Order in their favour) of the child. It does not lie with the Courts. It is down to the parents to make the decisions in the best interests of the child. If you believe your child, yourself, or someone in your household is at risk, then you should isolate in line with the Government’s Guidelines.
  2. You must continue to act in line with the Governments ‘Stay at Home Rules’, put in place on 23 March 2020. Under these rules, it is no longer permitted for a “a person, and this includes a child, to be outside their home for any purpose other than essential shopping, daily exercise, medical need or attending essential work”.
  3. Contained in the Stay at Home Rules, is guidance relating to child contact arrangements stating that “where parents do not live in the same household, children under 18 can be moved between their parent’s homes”. The guidelines do provide an exception to the ‘Stay at Home Rules’, however it is important to note that this is not mandatory. The Government have stated that you should make a sensible assessment of all the circumstances, and whether this is in the best interests of the child and immediate family around the child during contact. For example, if someone in the household is at high risk, contact should be suspended at this time.
  4. Separated parents should communicate with one another, and if possible, come to an agreement as to a practical solution. It is understandable that parents who have limited contact with their children will be frustrated, however it must be considered first and foremost, the best way to maintain the child’s safety. Even if one parent believes contact is safe, the other parent may completely disagree and feel genuinely worried about the situation.
  5. If a Child Arrangement Order is in place, and parents wish to suggest alternative contact arrangements or vary the Order, they are free to so do. To avoid disputes, parents should write this agreement down, by way of email, text message or paper.
  6. If one parent wishes to vary the Court Order due to sufficient and reasonable concerns, that parent may exercise their Parental Responsibility to vary such Order to ensure the protection of their child, to one they consider to be safe.
  7. Should this be raised at any Court hearing, the view of the Court would be to consider whether the parent acted reasonably and sensibly in light of the official advice, along with any evidence relating to the child or the family.
  8. As noted in our previous blog, parents who are unable to see their children during this time should be offered alternative contact to maintain the relationship, as well as being offered remote contact, whether through Skype, FaceTime, WhatsApp or any other video connection. If this is not possible, the parent should be offered contact via telephone.

The overall note is to ensure you act within the best interests of your child to ensure their safety.

 

Still have questions? Please do not hesitate to contact the Family Team on 01942 206060.

 

 

Covid-19, Separated Families and Court Orders

Covid-19, Separated Families and Court Orders

Everyone will now be aware of the Governments most recent response to tackle Covid-19 and the lockdown of the UK to limit the spread of the virus.

It is likely that separated families will have a number of questions, whether they can still see the children, or whether a Court Order will be enforceable during this time. The Governments position is frequently changing, however written below is the current guidelines.

The Cabinet Minister recently responded to a number of questions and confirmed that children can still continue to see the other parent, wherever this is safe to do so. It should be considered, however, if a parent or another person living in the household is considered to be vulnerable, then contact should be avoided during this time, to ensure their safety.

You should act in the children’s best interest

You should consider how frequent the other parent comes into contact with others who do not form part of their household.

During this period of lockdown, if you have a Court Order in place formalising contact arrangements, you should first consider whether contact taking place will be safe. For example, if your means of travel is via public transport, this should cease to continue during this period. A Court Order should not be enforced during this time. If contact is frequent with the other parent, it may be sensible to restrict this as much as possible.

Despite contact arrangements being formalised, to ensure the safety of the children, and others around you, contact should be suspended with the other parent entirely when this is unsafe to do so. You should not be penalised for this decision. It is understandable that the other parent will wish to see the children during this difficult time, however given the current restrictions, it should cease to continue if you believe the children or others in the household may be at risk. You could also risk a fine.

If the children frequently spend time with others, including grandparents, this should also cease. At all costs, children should be isolated from vulnerable people and of course, to ensure the children remain safe and well.  At this time, the children should have no interaction with any other person other than those residing in the same household and when attending for contact with the other parent.

You will note the Government set restrictions yesterday evening and stated you must only leave your home for the following reasons:

  1. Shopping for necessities, as infrequently as possible.
  2. One form of exercise a day, such as running or cycling, alone or with household members.
  3. For medical or care needs, for example to help a vulnerable person;
  4. Travelling to and from work, but only if you cannot work from home.

Meeting friends, shopping for anything beyond essentials, and gathering in crowds are now banned.

This is an extremely distressing time for everyone, so to ensure relationships are maintained, we would suggest contact is facilitated through social media channels, for example Skype or FaceTime.

The Government’s current position is to review the current measures in three weeks’ time. It is possible these measures may continue into the upcoming months. Wherever possible, it may be beneficial for the other parent to be provided with extended time with the children once these restrictions are lifted. This can be done via a mutual arrangement with the other parent.

We understand parent’s frustration and upset during these unprecedented times, and hope you all remain safe and well. The Government’s stance is changing every single day. Wherever possible, we will update you via our social media channels.Add a subheading (2)

If you further questions, please contact one of the Family Department via email, who will endeavour to respond to you as soon as possible.

 

The dangers of DIY leases

Gemma. March blog photo

The dangers of DIY leases

It may be tempting for both landlords and tenants of commercial properties to try and save money on legal costs by dealing with the matter between themselves. There are a number of downfalls that a landlord / tenant may fall foul of. Commercial property Solicitor, Gemma Eastham, looks at the pitfalls.

SDLT liability – tenants

Whether SDLT will be payable will generally by determined by whether a premium is being paid for the grant or assignment of the lease, the value of the annual rent per annum and the length of the lease.

Where no SDLT is payable, a tenant may still be required to notify HMRC (submit a return to HMRC).

Failure to submit a return and pay the duty (if any) within 14 days of the effective date of the transaction will lead to a fixed penalty of £100 and interest being charged on any SDLT and if the date of submission is more than 3 months after the filing date, the fixed penalty will increase to £200.

When do you need to register a lease at H.M Land Registry?

Leases granted for a period of more than seven years and certain other types of leases need to be registered at HM Land Registry.

It is worth pointing out that any easements contained in a lease, such as rights to access the demised premises through common areas or the use shared facilities, i.e car parks, will not take effect at law unless they are registered, even where the lease itself does not require registration.  For a tenant, it is therefore important to ensure that any registration requirements are adhered to.

Unwritten tenancies

Unwritten tenancies are dangerous for both parties to a commercial tenancy because there is no clear record of the terms that have been agreed.

A landlord, for example, will have no right to forfeit the tenancy in the event of a breach of the terms of the agreement because an express forfeiture clause is required for this.

With a business tenancy it is important to ascertain whether the agreement is within the security of tenure provisions contained in the Landlord and Tenant Act 1954 (the right for the tenant to renew the tenancy at the end of the term).  If there is no express clause excluding these provisions in the agreement and the Landlord and Tenant Act 1954 has not been ‘contracted out’, the tenancy will be deemed to be within the Act.

This means that the tenant will generally be entitled to request a new lease from the landlord at the end of the contractual term of the existing lease. The landlord would only be able to bring the tenancy to an end by serving notice on the tenant in the prescribed form, which requires the landlord to give the tenant not less than 6 months’ notice.

This may affect any provisions which have been agreed between the landlord and tenant.

For example, a landlord and tenant may have verbally agreed that either party can bring a lease to an end by giving one month’s notice to the other party. Legally, the landlord would not be able to rely on this provision and would need to follow the above statutory procedure (6 months’ notice).

The full extent of this topic could be covered in something far longer than a blog, but these are some key areas that both landlords and tenants should consider before proceeding. Seeking appropriate legal advice at the outset could potentially save a landlord and/or tenant money in the long run. Legal advice is always recommended.

For further information, please contact our Commercial team at MBH Solicitors:

http://www.wigansolicitors.com Tel: 01942 206060 Address: 26 Bridgeman Terrace, Wigan WN1 1TD.

 

 

Children Matters and the Courts – What Orders Can I Apply For?

An application is often made to the Courts when there are disputes between parties in respect of children matters. It is often the case that other forms of dispute resolution, including solicitor’s negotiations and Mediation, is unsuitable or unsuccessful, given the height of emotions when dealing with sensitive matters. Mediation however, is a requirement before applying to the Courts.

Contained within Section 8 of the Children Act 1989, there are 3 orders which can be applied in the Family Courts. These are:

  • Child Arrangement Order
  • Prohibited Steps Order
  • Specific Issue Order

The mother of the child/ren can apply for any of these orders, and the father of the child/ren may do the same, providing he is named on the birth certificate. Should this not be the case, or the applicant is another family member, they should firstly apply for leave (permission) of the court to make the application.

 

Child Arrangement Order

A Child Arrangement Order is an order which formalises contact arrangements between the parties. Such order will state exactly what time the child/ren should spend with each party, as well as any indirect contact. There are orders which will provide which party member the child/ren is to live with. An order provided by the Courts is an enforceable order, meaning if this is breached, the matter can be returned to Court for Enforcement proceedings. This is often required when parents are unable to agree on contact arrangements.

 

Prohibited Steps Order

A Prohibited Steps Order is an order from the Court which forbids a party from doing something which relates to the child/ren. For example, a Prohibited Steps order can be placed on a party who intends to move with the child/ren, to another part of the country, without prior consent of the Mother/Father. In essence, a Prohibited Steps Order places a restriction on a parent’s parental responsibility of the child/ren.

 

Specific Issue Order

A Specific Issue Order is an order which can arise following the dispute over a particular issue. This could be, for example, in relation to the child/ren’s schooling, medical treatment, surname, and so on.

In all cases brought to the Family Court, a supervisor from CAFCASS (Children and Family Advisory and Support Services) will be involved, even prior to the initial hearing. The role of CAFCASS is to consider all aspects of the case and provide recommendations to the Court as to what they believe to be a reasonable outcome.

Whilst making any decisions, the Court will have regard to Section 1 of the Children Act 1989, and the Welfare Checklist. The Courts paramount concern is the safety and well-being of the child/ren.

 

Have you had troubles with your former partner, or family member in relation to children matters? Please contact us for a free 30 minute appointment with Gillian Lavelle, or Megan Brookfield on 01942 206060.

 

Childrens matters and court orders - blog

Can I refuse a new business lease because I want to move in to the property?

Unless a lease is contracted out, a business tenant has a right to a new lease upon expiry of their contractual term, subject to limited grounds.

Section 30(1)(g) of the Landlord and Tenant Act 1954 contains an ‘own occupation’ ground.
This allows a landlord to refuse the tenant a new lease if they can prove they want to occupy the property themselves.

If a landlord intends to refuse to grant a new lease based on the ‘own occupation’ ground, the landlord must have owned the property for at least 5 years.

What does the landlord have to prove?

You need to demonstrate that you have a settled intention to occupy all or the majority of the property when the tenant leaves.

If you wish to use for residential purposes, you must prove an intention to occupy the whole of the property.

What evidence does the landlord need?

If you plan to occupy and you would need planning permission (e.g change of use from commercial use to residential use) then you should obtain that or provide evidence that planning permission is likely to be granted.

How does the landlord start the process?

You must serve a notice pursuant to section 25 of the 1954 Act, quoting ground G (and /or any other grounds to refuse you can rely upon).

If the tenant has already served a notice (known as a section 26 notice) requesting a new lease, you must serve a counter notice within 2 months.

For further information, please contact our Commercial team at MBH Solicitors:

http://www.wigansolicitors.com Tel: 01942 206060 Address: 26 Bridgeman Terrace, Wigan WN1 1TD.

Written by our Gemma Eastham, Commercial Property Solicitor