Landlord's legal costs?

[riskybusiness]

I have received my lease for approval and one of the points was that I pay for all the landlords legal costs in relation to the lease. Is this a normal request or should I refuse to pay it.

Also in a FRI lease is the landlord responsible for ANY of the upkeep of the premises such as natural/onset decay or does this all lie with the tenant.

Cheers.

[yeahbutno]

Slightly unclear Risky...do you mean that the Landlord is expecting you to pick up the tab for his legal expenses in setting up this lease? If so, very unusual IMO for a new business lease, and I would expect each party to pay their own exes. However, I guess if the building was in very high demand, the landlord could ask you to pay them.

If you are having an existing lease assigned to you it is a different matter.

Many of the lease clauses will refer to what happens if you were to break various covenants etc, and it would,be normal for these to include provision for you to pay reasonable legal expenses incurred by the landlord caused directly by your failure to pay the rent for example.

I believe that usually the tenant on an FRI lease is responsible for pretty much all the maintainance, however, that can also be negotiable. For example, one of our tenants was very concerned about a large settlement crack in an outer wall, and so his lease specifically included a clause that stated that he wasn't responsible for repairing it, nor any work caused by it spreading (which it never has).

[Editor]

It has been traditional with commercial leases, particularly with the longer institutional ones, that the tenant pays ALL the legal expenses for both parties.
In more recent times this has become more relaxed and is usually negotiated - depends upon the demand situation but we have always shared our own legal costs on a 50/50 basis with the tenant because we supply the lease, or tenants have not used a solicitor themselves and sometimes we've had a situation where we agreed to each party paying their own legal costs.
With a FRI lease the tenant is TOTALLY responsible for all works as has been said, even if the landlord does the work and recovers via service charges.
That's why its so important that tenants know what risks they are taking on before signing a lease, and they should consider having a survey done on the property if they are unable to propertly assess building defects themselves..
The traditional and accepted legal principles behind commercial property investments have been that the landlord (or investment insitution) has a "free return" on the investment - ie absolutely unencumbered by costs to the landlord.
With a slight change in commercial emphasis in modern times from a traditional landlord/tenant to a supplier/consumer relationship, and with Unfair Terms in Consumer and Commercial Contracts to be considered, these traditional principles are being modified, but they are still, by and large, applied and accepted within the industry and the legal professions.

[yeahbutno]

It has been traditional with commercial leases, particularly with the longer institutional ones, that the tenant pays ALL the legal expenses for both parties.

Really? I never realised that, my apologies. All my dealings have been over the last few years, and have been with sole-trader businesses although our solicitor & surveyor have never suggested that our tenant picks up our tab, and TBH I wouldn't have dreamed of asking them to either!

Thanks for the clarification Ed!

[coachwheeler]

All my dealings have been over the last few years, and have been with sole-trader businesses although our solicitor & surveyor have never suggested that our tenant picks up our tab

When I took my first lease some 15years ago it was certainly the case that I was asked to pay all costs, although for subsequent renewals the landlord paid his own costs, and as the lease varied in rent only there were no additional cost to me, other than my time in checking it carefully to ensure no other changes had been included that I needed advice on.

The costs of my own solicitor for that first lease I agreed as a fixed fee. The costs of the landlord's solicitor were in comparison astronomic and upon advice, whether I strictly had the right or not as I was not the one instructing him, as I was paying his bill I wrote to him and requested an itemised account and Certificate of Remuneration from the Law Society, making it clear if I was still dissatisfied I would consider having his account 'taxed in court'. In short order I received an amended account of much more reasonable proportions.

In a competitive world I have always found it worthwhile asking if a fixed fee basis is possible in what are relatively straightforward matters.

[propman2]

legal costs are paid as per negotiated, simple as that. But usually they are qualified as 'reasonable legal costs' and if you are expected to pay try to set a ceiling.

there is much case law on what is a repair and what amounts to a renewal of a constituent part of a building, in terms of a tenants repairing liability, and what matters is what is written in the lease. As the position cannot be generalised upon, no point going into it to deeply, but for example the words 'to put into repair' is as I understand it, quite onerous. There is also case law on 'inherent defects' ie whether a building part has a defect which is not down to disrepair and hence whether it falls within a tenants repairing liability or is down to the landlord to deal with. If an issue arises see a solicitor.

Regards

[herstonbell]

On a similar theme does anyone have a ball park figure of how much our legal fees and those of the landlord might be on assigning a lease? I've allowed for around £2500.00 - am I being naive or generous!

[yeahbutno]

If you're paying both, I'd allow a bit more than that. Although it could come in a bit less if everything goes absolutely straightforwardly (but it never does!).