Monday, 27 January 2014

Easy Come Easy Go - Tenancies at Will (27th January 2014)

Clients recently signed a tenancy at will of new office premises, in order to get the keys on a temporary basis.   This was fine.   I then became involved in regularising the short term overlap period of occupation of their existing offices. This was initially proposed also to be by way of a tenancy at will.  I advised against signing.

The clients had been in occupation for a couple of years, on a handshake with their landlord.   He in turn was also a tenant, having been granted a lease by the freeholders but didn’t need the offices for himself.  The freeholders had just found out about my clients and were insisting on the occupation being clarified and properly documented. They were concerned about my clients changing their minds about leaving and claiming statutory security of tenure under the Landlord and Tenant Act 1954.  The freeholders’ property manager (their City of London solicitors keeping somewhat sneakily in the background) had presented my clients with the tenancy at will to sign.

The problem for my clients would have been that a tenancy at will legitimises ongoing occupation only on a day to day basis, so is very precarious.  Either party can end it on immediate notice.  My clients probably did have statutory security of tenure under the handshake arrangement, as it applies by default to any tenancy (written or implied) of premises occupied for business purposes.  They shouldn’t have been giving this up lightly, just to accommodate the freeholder’s concern, however difficult this may have been to their own landlord.  

All parties eventually agreed to a new underlease, outside the Act, for a one year period with mutual, rolling 4 week break rights.  This was more cumbersome than a tenancy at will but the only way to satisfy everyone.  
A tenancy at will is generally appropriate only where it suits all parties for the arrangement to be on a day to day basis and where it doesn’t cause significant problems for any of them if the occupation is brought suddenly to an end.    

Paul Dixon

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