Internal Memorandum on Suitability of Precedent Lease and Amendments Required

To: Supervisor Solicitor

From: Legal Advisor

Subject: Draft Lease

Date: 16th June 2017.

Re: Lease Draft Legal Issues and Comments

The primary objective of writing this memorandum to you as the company solicitor is to comment on the draft lease of the company as it plans to enter into a ten years rent lease agreement. The memorandum will highlight areas the need to be changed in the current lease draft so that it can be compliant with Lease Code of 2007 and Landlord and Tenant Act of 1954.

Lease Code of 2007

Dear, solicitor the lease code of 2007 outlines the relationship between the tenant and landlord relating to the leasing of business premises to tenants.  One of the important clauses of the Lease Code 2007 touches on rent.  One of the aspects of the clause is on rent deposits, whereby, it states that the landlord is supposed to outline the amount of rent deposit to be paid by a tenant and the period of payment, plus the accruing interest payable on the basis of fair market rate (Crosby and Hughes, 2009). The clause indicates that tenant is supposed to be safeguarded against landlord insolvency or default. Another aspect of the clause is on rent review; whereby it indicates that rent review should be stated clearly by the landlord in the lease contract.  A close look at the lease draft indicates that it is compliant with the clause on rental deposits, as it clearly shows the amount of rent deposit to be paid by the business renting the premise and the period when the rent deposit term will expire.  However, I think, the clause on rent renewal does not comply with the lease code of 2007 as it does not provide alternative means through which the tenant can continue doing business without interruption if the tenant does not agree with the rent increment.  I believe the clause should be deleted as it is not properly written. Once, it is deleted a new clause on rent review should be written, and the changes introduced should provide detail about alternatives options available to the business concerning use of premise when rent is increased. For instance, where to continue using the premise after disagrees with rent increment or one has to vacate immediately, if he or she refuses to comply with rent increment.

When it comes to the repair clause, it states that tenant repair obligations should only be limited to the lease term and the premises condition at the time of lease. Also, unless stated otherwise, the tenant are supposed to give back the premise at the expiry of the lease within the similar condition the acquired it during the lease grant. The tenant has an obligation of keeping the building in good condition and repair, meaning that the premises should be in the same condition that it was given by the landlord during the lease grant period. The lease draft is not complaint with the lease code when it comes to the issue of repairs, whereby, the landlord give the tenant more repairs than required by the lease code of 2007. The tenant is only supposed to keep the premises in good condition and repair but does not mean to keep replacing different facilities and appliances found in the premise. Therefore, the draft, in this case, violates the lease code law of 2007. I think there is a need to introduce change on the repair clause as provided in the lease draft. The change should be introduced on issues of the tenant being required to make changes to the premise facilities and appliances; this condition is illegal. The tenant should only be required to keep the property in good shape, as long as it is in the same condition that the landlord gave it. However, requiring the tenant to make changes to some appliances after a certain period is not legal. Therefore, as the solicitor I think you need to introduce changes in the lease draft; the change should indicate that the tenant is only obligated to make repairs to the premises appliances and facilities as long as they are not in the same condition as during the period when the premise was granted to the tenant at the beginning of the lease period.

The clause on the future assignment of property by the tenant states that transfer of the premise to another tenant by the current tenant should not be done without the permission of the landlord. The draft lease is in compliance with this clause, as it clearly states that the tenant cannot lease the property to another tenant with making a written application of the landlord for approval. The main objective of the clause is to ensure that the property is leased to another tenant by the current tenant in line with the landlord condition regarding the use of the premise.

Wording of the Tenants Repairing Covenant

The lease agreement draft has a problem when it comes to the wording of the clause related to tenant repairs. The words used require the tenant to make repairs on the appliances on an annual basis are wrong. The wording is illegal as it does not follow the principle of maintaining a premise in good condition and repair and should be deleted (Dupuis, 2007). This principle states that the tenant is only supposed to ensure that the premise is in the same condition as when it was given by the landlord at the start of the lease agreement unless otherwise stated in the Head Terms of the lease covenant.  Therefore, the amendment that I think needs to be introduced on the covenant wording, deleting words that require the tenant to make repairs to the appliances and other things in the facility on annual basis. The new wording should only indicates that the tenant is required to repair the premise annually, if it is not the same condition as it was during the beginning of the lease period.

 

Assignment Clause

There is one major change that needs to be introduced in the lease draft’s assignment clause. I believe change needs to be introduced on the wording of the clause touching on a tenant being responsible for making an application to the landlord concerning renting the premises to another tenant who is going the same business. The change that should be introduced is deleting the statement and rewording it to have a new meaning that is fair to the tenant. The rewording should indicates that the tenant should only make application to the landlord of leasing the premise to another business before the expiry of the lease term, if the new business is involved in a completely new set of transactions from what is stated in the lease agreement. This will ensure that the company will be at liberty to lease the premise to a new tenant, if it feels it no longer need it in the future, even before the expiry of the lease contract.

Summarizing

The landlord and tenant act of 1954 protects the rights of tenants and landlords. I think that the Epharesse’s position as the tenant can be protected by ensuring that he is given an opportunity to state in writing one month to the expiry of the lease agreement whereas a tenant he wants to continue using the premise of not. According to Manuel (2009), the Landlord and Tenant Act of 1954 requires a landlord to renew the contract of the lease with tenant on request. Therefore, the landlord cannot give the property to another tenant as long as the current tenant is in need of the property. Thus, Epharesse’s can be protected by making sure that the covenant states that at the expiry of the lease period, he will be at liberty of renewing the lease agreement or not and should do so in writing.

References

Crosby, N., & Hughes, C. (2009). Monitoring the 2007 Code for leasing business premises.

Dupuis Jr, J. H. (2007). Case Law Update. Ann. Inst. on Min. L.54, 1.

Manuel, J. S. (2009). Recent Developments in the Law. Ann. Inst. on Min. L.56, 1.

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