Lease dispute Case Study
The Challenge – The parties were in dispute over a lease concerning commercial premises where it was alleged that the property had fallen into disrepair. The tenant claimed that the landlord was required to make the repairs relying on the lease and the landlord said the tenant was obliged to make the repairs under the terms of the lease. The lease contained a clause stating that the responsibility was the tenants under the repair and decoration clause in the lease which clearly stated it was their responsible for maintenance and servicing.
The dispute started in February 2019 and continued to January 2020. The landlord had considered via their solicitors to Issue legal proceedings to recover the sums due. After 11 months there was £116,000 outstanding in relation to rent from the tenant. They refused to pay until the dispute around the repairs was dealt with.
There were some interpretation issues with the way in which the lease was worded and so it had become difficult to prove to what extent certain clauses were valid.
Even though both parties denied liability for certain aspects of the dispute, they both agreed on the outstanding balance owed. They both agreed that they had acted in some way NOT in accordance with their obligations. So the landlord had not undertaken some maintenance and servicing due to the rent withdrawal and the tenant had not kept up some of his repair and decoration obligations due to servicing and maintenance not being carried out.
The Solution – A joint conference call was held with both parties followed by 4 private meetings to determine what both parties agreed upon. There were a few difficult conversations where it became untenable to get through to the landlords as they had spent over £15,000 in legal fees and so were already out of pocket.
After some protracted negotiation around the certain differences both parties came up with some suggestions on how the lease could be made clearer to ensure that they were both protected.
The wording took some time to agree was then inserted in a new lease which was renewable within 6 weeks based on reaching an amicable agreement. The landlord wanted his rent arrears paid up front before he made any decisions BUT after careful consideration and discussions with the lawyers, they were satisfied with 50% of the rent arrears to be paid within three months followed by monthly payments to clear the balance and agreed to undertake to carry out the works on site within three months.
The Mediation took three and half days compared to almost eleven months which the landlord had already spent trying to reach a deal with the tenant.
The cost of the mediation on a daily rate of £850 was significantly less than what the landlords had already spend on legal fees and could have easily increased to a significantly to thousands if they had decided to take the legal action further.
Next Steps
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This article is for information and interest only. It is not a substitute for full professional advice, which will take in to account the specific and individual circumstances. Navigate Business Recovery Limited cannot accept any responsibility for any loss arising as a result of any person or organisation acting or refraining from acting on any information.
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