If your business is planning to change premises, you might be asked to handle the moving process.  There will be a lot to do, and you should arm yourself with a good understanding of the legal side of things to help you get the best results.  Finding the perfect location is just the start – but good communication with your agent and legal advisers will help things move smoothly.

1.  Agreeing the Heads of Terms

The first thing to deal with is the content of the Heads of Terms (“HoTs”).  If you are instructing an agent, follow their advice at this stage.  HoTs will specify the “headline” issues, such as the amount of rent payable, the size and extent of the new premises, and will sometimes deal with more technical issues, such as responsibility for repairs.  Make sure these are agreed to your satisfaction and then send them to your lawyer.  Errors at this stage can be difficult to sort out at any later stage because the legal team on the other side will pounce on them and point to what was “agreed”.

2.  What documents are involved?

If the lease is dependent on something happening beforehand, such as fit-out works being carried out, there might be an “Agreement for Lease”, which will come into effect before your move-in date.  The agreement will oblige your company and the landlord to enter into the lease at a future date, usually subject to certain conditions being satisfied.

If you’re taking a new lease, the document will be negotiated from scratch.  But companies often take the remainder of an existing lease from another tenant.  If this applies to your company, you shouldn’t automatically accept the lease as it stands – while the landlord isn’t under an obligation to agree changes, market conditions can mean that you could try to agree new terms, so discuss this with your lawyer and agent from the outset.  Any variations would normally be dealt with in the landlord’s “licence to assign”.

You will normally be expected to provide evidence to the landlord of your company’s financial ability to observe the obligations in the lease, and you might be expected to provide a deposit.  It’s important to make sure the terms of any deposit are balanced and fair – your lawyer should discuss this with you.

3.  The due diligence process

Taking a new lease will represent a significant liability for your business.  It is therefore essential that you know what you’re getting into, and that the lease you want to acquire will be adequate for your needs.  Your lawyer will undertake an extensive process of investigation, which should reveal whether there are any significant problems with the building or your proposed use of the premises.  Your lawyer won’t be able to advise on the structural condition of the building – so make sure you engage a surveyor before you become committed to the deal.

4.  Agreeing the details

Once the HoTs are agreed, and both sides have agreed what documents will be involved, your lawyers will begin the process of agreeing the documents with the other side.  Usually, landlords draft documents and the tenant’s solicitor will try to make them more “tenant friendly”.  The documents will travel between the respective lawyers, until agreement is reached.  There are a lot of technical issues in leases, rent deeds and licences, but they can have a huge financial impact on your company so don’t be afraid to ask if there’s anything you don’t understand.

5.  Completion

Once the documents are agreed and your lawyer has provided feedback on the due diligence process, you will be required to sign all the documents in readiness for completion.  Make sure your finance team is aware of the timing of any financial outlays.  These are likely to include an initial rent payment (often a quarter in advance), any rent deposit monies, lease registration fees and stamp duty land tax (“SDLT”).  Your lawyer should advise you if any SDLT is payable.

6.  An ongoing commitment

Don’t think you can forget about your lease after completion.  It will undoubtedly contain ongoing obligations that you need to observe, and any breach could be costly or could lead to a forfeit of your other rights under the lease.  Don’t forget – if in doubt, consult your legal adviser.