Break Clauses - Traps for Tenants - A cautionary tale

In  a recent case (Avocet Industrial Estates LLP v Merol and another [2011] EWHC 3422 (Ch), the Court held that a Tenant invalidly exercised its right to break its lease because it had  not made all payments due under the lease as required by the break clause. In this case, as is common in most commercial leases, the lease required the payment of default interest on late payments. The Tenant served its break notice in the appropriate form on the Landlord and a day before the break date the Tenant sent the Landlord the principle rent due by cheque, the keys and confirmed the premises were vacant. However, before the expiry of the break notice, the Tenant had paid its rent or insurance late on three occasions. Notwithstanding the fact that the Landlord did not issue a demand for default interest on these late payments at the time, the Landlord wrote to the Tenant after the expiry of the break date advising that the Tenant had not compiled with the break clause because firstly, a cheque was not acceptable (the Landlord required cleared funds by the break date) and secondly, default interest was due because the Tenant had paid rent and other sums late.

The judge held that whilst the outcome was a “harsh one”, the Tenant had lost its right to break the lease and was bound for the remainder of the term.  The decision highlights the importance of obtaining the correct legal advice before negotiating new leases and seeking to exercise your right to break.

If you require any further information regarding Break Clauses or Commercial Leases in general please contact Ms M Nagra in our commercial property team. 

Football Team 2012

Edward Harte kicked off 2012 as their formidable 5-aside football team competed  in the Firm Balls' Champions League trophy.  With high hopes of retaining the trophy they won last year and aiming to shave off some Christmas turkey the team dusted off their kit and took to the pitch. Unfortunately the Christmas break seemed to take its toll on fitness levels and they had to settle for a respectable 4th place.  Aiming to build on this for next week's first league match.........................

Stamp Duty Land Tax

Exemption for first time buyers

Chancellor George Osborne has advised that he will not be extending the Stamp Duty Land Tax holiday for first time buyers and as planned this will now end on the 24th March 2012.

First time buyers should be aware when planning their finances that unless the government change their decision before the 24th March  2012 any purchases which complete after this date will be subject to the usual stamp duty land tax payments.  Therefore careful consideration should be taken when agreeing completion dates and if you wish to rely on the relief for first time buyers please ensure that you inform the solicitors acting for you of the importance of your transaction being completed before the 24th March 2012.

The current stamp duty land tax brackets are :-

£0 - £125,000     No Stamp Duty Land Tax payable

£0 - £150,000     No Stamp Duty Land Tax payable if the property is in a "Disadvantaged Area"

£125,000 - £250,000     1% of actual purchase price

£250,000 - £500,000   3% of actual purchase price

£500,000 - £1m    4% of actual purchase price

over £1m    5% of actual purchase price

If you require any further information regarding Stamp Duty Land Tax please contact our residential conveyancing team