Commercial property issues to consider when selling your business
A question we are often asked is what a commercial landlord’s legal responsibilities are on the grant of a new lease?
As a general rule, this depends on the terms of the lease. Having said that, there are laws that a landlord needs to be aware of when renting out commercial premises, many of which relate to health and safety.
- Fire safety
The law is that the person with control of the premises is responsible for fire safety. This will be the tenant if they employ staff on the premises. Often though the landlord will take care of fire precautions in the common parts and to common systems such as the building’s fire alarm. The lease needs to be clear so that the parties know where their responsibilities lie.
- Asbestos
Responsibility for dealing with asbestos will fall on whichever party has the duty to repair and maintain the premises. If the lease is silent on this it will be down to the landlord. A well drawn up lease will refer specifically to asbestos so that there is no doubt at all about where the obligation lies. This is important because asbestos found on the premises may have to be removed. This can be very costly. There are severe penalties for not managing asbestos including fines of up to £20,000 and up to two years in prison.
- Electrical safety
This too should be set out in the lease. Landlords will usually have a duty to take care of the wiring system in the building and electrical equipment, and they should conduct safety checks before the lease is granted. The lease should impose a requirement on the tenant to assess the risks of their use of electricity and to take steps to control any risks.
- Gas safety
Where the premises are a workplace, the tenant will have primary responsibility to make sure any gas appliances are maintained in a safe condition. The landlord will have duties though for any gas appliances supplied by them in the common parts and these will need to be safety-checked before the lease is entered into.
- Air conditioning and heating systems
The responsibility for air conditioning or heating systems will belong to the party with control over the equipment. This may be the landlord if it has control over the day-to-day functioning of the equipment. Again, this should be clearly set out in the lease.
- Energy Performance Certificates (EPC)
A landlord must provide an EPC when it rents out commercial premises and failure to do so can lead to a fine of between £500 and £5,000. Landlords must also display an EPC to their commercial building where all these conditions apply:
- the total useful floor area is over 500 square meters
- the building is frequently visited by the public
- an EPC has already been produced for the building’s sale, rental or construction.
EPCs are valid for 10 years.
Conclusion
The overriding message of the above is that the terms of a commercial lease are crucial in setting out a landlord’s responsibilities. This is especially relevant in relation to health and safety issues. Where these are passed onto the tenant the terms of the lease should be clearly stated so that no residual liability falls on the landlord.
If you have any queries about the letting of commercial premises, please contact Richard Price at richard.price@bracherrawlins.co.uk.
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