The Courts & Lease Renewals

Author:Mr Mark Lavers
Profession:Reynolds Porter Chamberlain
 
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The use or occupation by a commercial third party of part of a hospital could well give the third party the right to renew its occupancy at the contractual end of the agreement allowing the occupation because a Tenant of business premises has the right to renew its Lease at the end of the Lease term. Calling the occupancy a Licence will not prevent the Courts from deciding that it is in fact a Tenancy (a Lease) if the occupier had exclusive occupation of the area, especially if rent is paid. This rule does not apply if before the Lease was granted/a relationship of Landlord and Tenant was created an exclusion order (often called a contracting out order) was obtained from the Court. There are certain other exceptions to this principle which this article does not address.

A Landlord can successfully oppose the grant of a new Lease if it can prove a designated statutory ground. The most common of such grounds are re-development and owner occupation. If the Landlord pleads a designated ground but the Tenant feels the ground has not been made out there is a dispute between the Landlord and the Tenant over whether or not the new Lease is to be granted and the Court will make its decision on the evidence presented to it.

However, even if the Tenant wants a new Lease and the Landlord is quite prepared to grant such a Lease the Tenant must still "protect" its security by making an application to the Court. In the past the Landlord and Tenant would generally agree that the Court proceedings were stayed so that the terms of the Lease could be settled by negotiation. The Courts very rarely intervened in this arrangement and it was not uncommon for the stay to last many months, if not years. The points that were generally in dispute were the length of the new Lease and the rent payable, neither of these are particularly "legal" and so they were usually settled by the parties' surveyors. It was very rare for such a renewal to go to a full Court hearing because it would probably not be worth either party's costs and time.

The Woolf reforms which came into effect in April 1999 affected all forms of litigation. Unfortunately for Landlords and Tenants this included Landlord and Tenant Act renewals, even where the Landlord had indicated that it would grant a new Lease. The difference in the way that the various County Courts interpreted the reforms was enormous. We have some cases where a Court has allowed a "general stay" which has been in place...

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