One of the most frustrating things about law for business owners is the often verbose language that is used to describe the simplest of terms. Our Commercial Property Solicitors get it! For example, one of the most important words in a commercial lease agreement is ‘covenant’. But what does this word, which brings up connotations of medieval times actually mean? This brief article will explain.
What is a covenant in a commercial lease?
A covenant is a promise/agreement to do something or not do something. The former is known as a positive covenant, i.e. you will keep the property in good repair; the latter is restrictive, i.e. you promise to seek the landlord’s permission before subletting part of the building.
What are the most common types of commercial lease covenants?
- you promise to pay rent on time and in the correct manner
- any reasonable repairs will be actioned
- you will insure the property
- the landlord has the right to enter and inspect the premises
- alterations will only be made with the landlord’s permission
- you will not create a nuisance that affects neighbouring properties
When taking on a business lease it is important to have an experienced Commercial Property Solicitor advise you on the proposed covenants, and fully explain how they could affect you now and in the future.
How do covenants relate to forfeiture?
If you breach a commercial lease covenant, your landlord may exercise their right of forfeiture if such a right is contained in the lease. The most common covenant breach that triggers forfeiture proceedings is non-payment of rent.
Final words
Commercial leasing requires careful consideration because it's often long and complex. There are compelling obligations and responsibilities for tenants, landlords and guarantors, and as such, all parties should ensure that they are safeguarded. Our expert commercial property lawyers work with tenants and landlords to provide commercial leasing legal advice and deal with property disputes, and in general, advise on all types of commercial property law.
Covenants (or promises in ordinary language) are a crucial part of the commercial landlord and tenant relationship. Book a free consultation with one of our Commercial Property Solicitors before signing your lease to ensure you understand and meet your lease obligations and avoid your landlord exercising their right of forfeiture, or if you are concerned about breaching a covenant.
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