Ep56 – Commercial Lease Searches: The £400 Most Tenants Skip (and Shouldn’t)

So today we're talking again about commercial leases and this time we're talking about it from the tenant's perspective and we're covering a really common question that we get asked pretty much every single time we take on a new instruction and that's when you start talking to the tenant about investigating the building and obtaining searches so conveyance and style searches and they'll always ask the same thing and that is do I really need them

I guess it's it's quite a weird woman because you use the same phrase tenant for like a house so domestic if you're a tenant yeah and you lease a house sort of rent a house sorry should say And you obviously use the phrase tenant for commercial.

From what I observe from the uneducated perspective, it feels like sometimes those worlds become a bit merged.

People assume it's the same thing, even though they are very different.

So you probably wouldn't get a search if you were going to rent a house.

No, I think that's

fair.

I think as well, because as you say, the same term is used.

Then if you're a person who rents a property for yourself to live in, you'll associate that with having really minimal risk for you, really minimal obligations.

And in that world, you know, there's much more for the landlord to do than there is the tenant.

But when you switch that to a commercial context, it's very much the opposite, whereby the tenant is responsible for everything.

And the landlord rarely, you know, might do things and then claim them back as a service charge, but they're running it as a business and it's very much the tenant focus in terms of the obligations.

So on the back of that, I'm assuming the answer to the question, does a tenant really need a search, been a hard yes?

Yeah, I mean, we could just finish there today and say yes, but we won't do.

As I say, it's a fair question because by the time the tenant reaches the point of being faced with the big long list of searches that we might recommend, they've already negotiated heads of terms, they've already seen the property, they might have considered fit-out works, they might know that there's a draft lease that's ready to come over.

And they don't really, if they can avoid it, want to then go down another avenue of whether they're going to investigate all the background in terms of the property.

But when, as you say, if you compare it to when it's a residential property, searches are like a discovery toolkit, if you like, for a commercial tenant, because there's things in the background that might be lurking that aren't... discoverable by physical inspection and they won't be discoverable by looking at the lease documents themselves so it's a it's a risk finder really to see what's going on

i suppose it might be that does asbestos fall into one of those things i suppose that's a good example that's

separate really so in in addition again as you can see how it builds for a tenant in addition to you've got the lease documents which are contractual you've got the actual commercial terms that they'll have agreed with the landlord then you'll have us saying you should get searches well in addition you should be asking the landlord whether they've got available asbestos reports fire reports they need to know the epc positions there's a whole host of things going on and that all points to why you need representation because we'll give you a checklist we'll get most of it for you as part of the process but in terms of the searches because it's something you have to physically pay for you need to make a decision as to whether you want them or not because you use a service online where you order them via a provider and then you wait for them to come in and if we get them then we'll report on them to you to say if there's any problems but of course if you tell us not to get them we well we never know the answers really

Yeah, and I guess you probably come across this very commonly where they're quite keen to just get this deal over the line, whether it's because of excitement, enthusiasm, or because they've actually got a pressing time issue.

Yeah, yeah.

wrongly but we would say that because we're biased the tendency might be to become frustrated with the lawyer who seems to be putting blockers in place by suggesting these things which are only ever going to extend how long it takes to do it but your answer and quite rightly so will always be yeah but it's can you afford not to do it if the worst case happens and it's not you trying to put obstacles it's i guess you just trying to advise them of potential issues so that again they're making that informed decision and if they want to play the roulette they're perfectly titled to do so but it's having been told

Absolutely.

I mean, there's times when it's more risky than others and we can, you know, I can run through some of those things, but you are often seen as, are you just putting blockers in the way? Are you trying to charge for something that doesn't need to be done, et cetera, et cetera.

But as long as the client's able to make an informed decision as to what they should or could do and what the risks are of not doing it, then they can balance that up in like a risk reward style way and make that decision.