June 22, 2024

KT Business

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Tips for managing commercial property disputes

3 min read

Whilst these aren’t always frequent, it’s always a possibility when entering into binding contractual arrangements with others.

In this article, we’ll discuss how to manage commercial property disputes, and how to stop them escalating.

How can commercial property disputes arise?

A property dispute can arise in various ways, but the following represent commonly litigated areas include:

  • Non (or late) payment of commercial property rents
  • Rent review or service charge disputes
  • Permitted property usage
  • Assignment (or sub-letting) without the landlord’s consent
  • Failure to adhere to lease covenants
  • Failure to meet ongoing repair obligations 
  • Landlord & Tenant Act 1954 disputes on lease renewal / termination 
  • Dilapidations – failure to return the premises in the condition required by the lease
  • The development and resolution of the dispute will of course depend on the type of dispute and how it has arisen.

What is the best way to resolve a dispute?

You have to think about the type of dispute and how it has arisen. Some disputes are far easier to remedy and resolve than others. 

A dispute regarding rent arrears, for example, is usually resolved by the business tenant simply paying the outstanding rent. The matter in dispute is straightforward and usually the amount due will be simple to calculate. 

On the other hand, a dilapidations dispute, for example, is likely to be far more complex and nuanced. The parties may have conflicting dilapidations reports, as the expert views on both sides may be at odds with each other. Also, the sums in dispute may not be at all clear-cut, as they depend on numerous factors. It’s also possible the figures will be massaged by both parties to suit their side of the argument. 

Regardless of the complexity of the dispute, the best way to resolve it is through maintaining open lines of communication and keeping cordial. If both commercial landlords and tenants can do this then usually a suitable compromise can be reached. 

If they fail to do this, then the dispute may escalate. Each party will become more entrenched in their views and the likelihood of litigation increases. This is really something both sides should aim to avoid, as it can be lengthy and costly.

What are some top tips?

Here are some tips in managing commercial property disputes:

Refer to your lease  

Your lease is there to help you – it’s your primary tool of reference when it comes to your contractual commitments, and as such it can guide you in resolving disputes. Make sure you fully understand your commercial lease when you enter the agreement, and know what it means for your business.

Money matters 

Most commercial property disputes relate to money, either directly or indirectly. Keep this in mind, and work towards an agreed financial settlement if one is achievable and affordable. If you are having continual issues with paying your rent, it’s best to be upfront with your landlord and seek to find a solution that doesn’t put either of you at risk. 

Reach compromises 

If you keep talking and are willing to accept compromises, you will find resolutions are easier to reach. Focus on finding opportunities to keep working together, and avoid digging your heels in. Your lease is a legally binding contract, so if disputes continue and one party terminates the lease, both parties may be worse off.

Take photographs 

They say ‘a picture paints a thousand words’. If your dispute relates to property conditions etc, appropriate up-to-date photographic evidence can be vital. Video recordings can also be useful here, as both can be time stamped to show that the evidence is recent.

Take expert advice 

Enlist the professional services of Chartered Surveyors and solicitors to guide and support you – both when you take on the lease and as you navigate through its term and its conclusion. 

Do not lose sight of the bigger picture 

If your premises are perfect for your business, then it is in your interests to resolve matters with your landlord as soon as possible for the benefit of your business. It’s unlikely to be in your interests to have your commercial property dispute rumble on longterm if it may affect your ability to trade from your preferred business premises.

Get legal assistance from LawBite

If you require legal advice with regards to an existing commercial property dispute or are looking for some general advice and support in this area, we are here to help.

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