News & insights
The importance of embracing property searches for commercial leases
A commercial property lease is normally one of the biggest overheads a
business has after wages. This is not taking into account the initial outlay
for renovations often required to ensure the premises is fit to benefit the
commercial activities of the leaseholder. However, many organisations
instructing Solicitors to manage the legal aspects of securing a commercial
lease decline to invest in basic property searches. This may be because
they are not actively purchasing the property. But for those committing to
high-value lease agreements, failing to undertake property searches can lead to
legal disputes and/or significant costs to rectify a situation which could have
been avoided had searches been carried out as part of the due diligence
process.
Most people are understandably averse to spending unnecessary money. As
a commercial lease will place the business owner as a tenant as opposed to a
property owner, many may feel that paying money for searches should be the
landlords’ responsibility, opting to assume that major maintenance obligations
would belong to the property owner. However, this could be a significant and
costly oversight.
Domestic tenants are protected under Section 11 of the Landlord and
Tenant Act 1985. The legislation ensures that all property owners must ensure
their property is in a good and safe state of repair. Unfortunately, commercial
leases usually place the onus on the tenant to complete health and safety risk
assessment checks, fire safety compliance, electrical equipment checks, gas
safety checks and managing asbestos problems. Essentially, failing to provide a
safe working environment, including areas involving the building a leaseholder
rents, fall upon the shoulders of the tenant.
Once potential tenants are aware of the risk in not conducting searches
on a commercial lease, they are likely to see the value in having them
done. For example, in 2012, flooding caused £200 million worth of damage
and loss to businesses. Many businesses whose insurance failed to respond, and
those who did not have adequate cover, faced insolvency. Clearly, insurance
offers protection, but without full knowledge of the risks, something that a
survey provides, it is difficult to estimate the type and scale of insurance
required.
As part of the due diligence process, potential tenants should also be
encouraged to invest in extensive surveys, especially if they are unable to
negotiate around the ‘full repair and insure’ terms standard in many commercial
leases.
At Thames Water Property Searches we call ourselves “the property search experts” for good reason. We are not only a search supplier, but we also are a search producer of the CON29DW and a partner of NLIS. Working closely with leading suppliers we ensure that we not only sell the searches but fully understand the detail within them.
We understand complexity and take the time to support you with issues that may arise offering that bespoke service which you normally only receive from the smaller companies and at a premium. Here at Thames Water Property Searches you get that service as standard, along with the trusted brand of Thames Water knowing that we will always be here to support you.