Break rights – a salutary lesson

Will you shortly be exercising a break option that requires you to give vacant possession of the premises as a condition of the break? If so, or if you will shortly be required to give vacant possession as a condition of the break, then read on.

Useful guidance

A recent High Court case (Riverside Park Ltd v NHS Property Services Ltd) considered whether a tenant had complied with its obligation to give vacant possession of premises so that the exercise of the break right was effective.

In this case the premises at the date the lease was granted were open plan. The tenant later carried out various works, including installing demountable partitions, which remained in-situ on the break date. The Court had to decide whether the works were chattels or tenant’s fixtures.

The Court decided that the partitions were chattels, primarily because they were demountable and the purpose of affixing the partitions to the premises was to benefit the tenant, rather than provide a lasting improvement to the premises.

In the context of the vacant possession condition, it was held that the partitions substantially prevented or interfered with the landlord’s right of possession of the premises. This meant that the tenant did not give vacant possession of the premises and was not able to break the lease.

Practical tips – what you should do

  1. Where the right to break is conditional on giving vacant possession, the key point is that no-one, and nothing, is left in the premises which might interfere with the landlord’s right to use and enjoy the premises.
  1. You should carefully check the terms of the lease and any licence for alterations as regards reinstatement. If they require you to reinstate the premises, any failure to do so might mean that you will fail to give vacant possession.
  1. Each case will be different. If you are unsure as to whether an item should be removed, take a cautious view and seek professional advice. The consequences could be costly.

 

Contact: Adam Boyd

By | 2016-10-24T16:12:59+00:00 August 16th, 2016|

About the Author:

Adam Boyd
Adam, a solicitor in the Litigation team, has particular expertise in dealing with property disputes within the licensed trade sector and regularly acts for clients in relation to forfeiture proceedings, opposed/unopposed lease renewal proceedings, dilapidations claims, recovery of rent arrears, nuisance claims and break notices.