Regularly, when I advise on acquisitions and disposals of property portfolios, the investigations that I carry out bring a few surprises to the client.

When you need to know what lease liabilities there are and the options for exit - what to do first? Call me; I will be only too pleased to help! But if the budget is non-existent where should you start? First obtain copies of the leasehold documentation for every unit – the deeds. If your property is registered at the Land Registry you will need to get copies of the registered title, do this online at www.landregisteronline.gov.uk. Start with the lease itself, but here is the first beware. Leases can and often are varied during the period which they cover – we refer to this as the Term. It is crucial that you look for any variations which may be contained in subsequent documents. Don’t assume the document would be called a Deed of Variation, variations can be found in other documents, such as a licence to assign for example. Therefore, get all of the documents relating to the property and read through them all.

Now, you can start to build a picture of the lease arrangements. Attention to detail is critical, firstly at the parties to the lease; is the tenant (if it is a company) still in existence? Is there a guarantor who guarantees the tenant company’s performance under the lease? These details are crucial as they will go the essence of who is liable under the lease.

The next thing to look at is the term of the lease; if there are fifteen years to run it is obvious that your liability is greater than with a lease with only 3 months to run. Look closer still and if the term has expired you may be “holding over”. This term refers to a lease which has expired but where you are still in occupation under the terms of the expired lease and paying rent. If this is the case an exit from this unit may be fairly easy to achieve.

Having looked at the term, now look to see if there are provisions for bringing the term to an end before its expiry. We refer to such clauses as break clauses; allowing a party to the lease to break the lease on certain specified criteria. You may find leases where the tenant has been given the option to break a lease on a certain date. These clauses need specialist advice if you intend to rely on them, they are interpreted by the courts very strictly and provisions relating to the service of notice to activate the break clause have been highly contentious. Do not rely on your own judgement, seek advice.

Now, look for the clauses that allow the tenant to dispose of the lease – referred to as “alienation”. If you don’t have the right to break the lease, this is probably what you will have to rely on. There are sure to be conditions for what we refer to as assignment – where a new tenant takes your place in the lease, or for underletting – where you sub-let the premises to another business. Some thought is required here as to which route to take – if you want out and never want the unit back, then assignment is the best option. If you may want the unit back at some stage in the future, then underletting (in certain circumstances which do not give the sub tenant “security of tenure” – rights which allow occupation almost indefinitely) may be preferable.

Look closely at the conditions, the landlord may require certain criteria to be followed and you will most certainly have to apply for the landlord’s consent to assign and underlet and this may be qualified by a provision stating that the landlord cannot unreasonably withhold its consent to an assignment or underletting. If you find a candidate to take the lease your application to the landlord will need to enclose relevant information about the candidate – usually three years accounts and references, but possibly more information for new enterprises, such as a business plan, CVs for the principals etc. So, having made your application you would need to wait for the landlord to give you his answer, if the lease provides that the landlord cannot unreasonably withhold consent then it has about four weeks to give you an answer, or the landlord is deemed to be acting unreasonably. So, if the landlord delays after four weeks there is the potential to just assign or underlet without further delay – but on this point you should again take specialist advice.