By Hasin Tariq Amin, Associate Solicitor, Commercial Property Dispute Resolution, WHN Solicitors. Recognised by the Legal 500 as a recommended lawyer.
A commercial lease is essentially a list of promises, and a breach of a commercial lease is simply one of those promises going unkept. What surprises people is how often the party in breach is the landlord. Both sides sign up to obligations, and both sides have routes against the other when those obligations are not met.
Most people assume a lease breach means a tenant has stopped paying or hasn’t maintained the property. Often it does. But I have acted on cases running in both directions, including for tenants pursuing their landlord. A commercial lease binds both parties, and when one side fails to meet its obligations, the other has real routes to do something about it.
What is included in a commercial lease?
Broadly speaking, commercial leases follow a standard format, but no two are identical, and the variations in how clauses are drafted can run into the thousands. That is why a question about your lease can rarely be answered by applying your experience of another one.
Most leases cover the same ground, though: rent and the other sums payable during the term, including service charge, tax and utilities; repair and maintenance obligations, split between landlord and tenant in whatever proportions the lease sets out; and what the property can and cannot be used for.
Every one of those clauses is an obligation somebody has taken on, which makes every one of them something that can be breached. That is the connection worth remembering: the clauses are not just administration, they are the list of things that can go wrong.
What counts as a breach of a commercial lease?
A breach of a commercial lease is any failure, by either party, to do something the lease requires, or doing something that the lease prohibits. Commercial lease breaches go both ways: a tenant who stops maintaining a premises is in breach, while a landlord who fails to keep the structure in repair when the lease places that duty on them is equally in breach.
The symmetrical nature of this relationship is important, as tenants often assume that a lease is a strict set of rules imposed solely on them, while landlords often assume that many of their obligations end at the point of keys being handed over.
Neither is correct. A lease binds both parties.
What are the remedies for breach of a commercial lease?
Whichever party is not in breach of the lease will generally be able to pursue either damages, an injunction, reinstatement, or in rare cases possession of the property. Which of these actually occurs will depend on the nature of the breach, the wording of the lease, and what you are trying to achieve. Damages are intended to compensate for losses the breach has caused.
In order to succeed with a claim following a breach of a commercial lease, you will need to prove the loss and connect it to the breach that caused it. If the connection between the two is too distant, the claim will fail.
Often seen as the ideal remedy for when money alone will not fix an issue, an injunction is an official court order requiring a party to either immediately start, or stop, doing something. Possession, on the other hand, brings the lease to an immediate end and allows the landlord to take the property back. However, it will only be available in limited and serious circumstances.
One point worth highlighting (because we often see it catching tenants out): withholding rent is not a remedy to the breaching of a commercial lease. If you stop paying rent, even in an attempt to force the landlord’s hand, you risk putting yourself in breach, which is a considerably worse position than the one you started from.
What happens when a landlord fails to repair?
Should a landlord be found to have not met their repair-obligations, they can be pursued for any losses this failure causes. They can also be compelled by the court to carry any necessary repairs out.
I recently acted on behalf of the tenants of a 1920s theatre. The building was undergoing necessary renovations when the roof collapsed. The consequences for the tenant’s business were immediate and severe. Bookings were cancelled, planned productions were lost, and the revenue that went with them disappeared.
As a result of the problems caused, we were able to successfully pursue the landlord on two fronts: damages for income lost, and an injunction to compel the landlord to fulfil their obligations and fix the roof as soon as possible.
This case is an ideal illustration of why the two remedies are so important in tandem. Damages addressed what the tenant had already lost, while the injunction focused on how, without the roof repaired, the losses would have continued to accrue.
What happens when a tenant breaches their maintenance obligations?
Should a tenant fail to keep the premises in the condition required by the lease, they will expose themselves to a claim. In some leases the landlord may even be able to step in and take action directly.
Another case I recently worked on highlighted this issue in practice: the tenant ran a dry cleaning business, and had breached their maintenance and tidiness obligations by leaving dye, chemical solutions, and scrap clothing across the yard. Upon reaching the point of causing a nuisance, particularly due to the chemical fumes, the landlord felt obligated to step in.
The first step taken was to give the tenant notice to correct the breaches. However, when this failed and the breaches remained as-they-were, the solution was found within the lease. It afforded the landlord the legal right to enter the premises, correct the breaches themselves, and charge the resulting costs back to the tenant.
Can a landlord do repairs and charge the tenant?
A landlord can only enter premises to undertake repairs if the lease expressly provides for it. When clearly outlined in writing , they may choose to carry out the works, and recover the cost from the tenant.
This is often the most practical route available to a landlord, because the alternatives are slower and more limited than people expect. It depends entirely on the lease containing a clear right to do it, so the first step is always to check whether that right exists. Two cautions apply.
- The costs need to be recoverable as a debt rather than as damages, which is a drafting point.
- The landlord should also confine the works to the breach that justified entry. The lease gives a right to go in and put a specific problem right, not a general licence to carry out works, and a landlord who goes further can find themselves liable to the tenant for trespass.
What happens next?
Part three of our series looks at the end of a commercial lease, how a tenancy is terminated, and what each side can do when the relationship reaches this point.
Get reliable advice on a lease breach
Whether you’re a landlord with a tenant who is failing to meet their obligations, or a tenant whose landlord has left you unable to trade, your position will almost always be better the earlier you take advice.
Your options will depend on the wording of your lease. They also depend on what you do first, because the wrong opening move can weaken a strong position before anyone has taken advice.
Hasin Tariq Amin is an Associate Solicitor at WHN Solicitors, specialising in commercial property dispute resolution and landlord and tenant disputes. Recognised by the Legal 500 as a recommended lawyer, and with over eight years of post-qualification experience, he acts for landlords, tenants, developers and property owners across the full range of contentious property matters, from repairing obligations and dilapidations claims to break notices, forfeiture, and lease renewals.
To discuss a breach of a commercial lease, fill in our short contact form, call 0161 761 8089, or email hasintariq.amin@whnsolicitors.co.uk.
