Commercial Property Newsletter Autumn 2011

Autumn 2011

Welcome to our quarterly legal update for the commercial property industry.

For more information or if you have any comments about this newsletter, contact Jo Clark, a solicitor in our commercial property team or Maureen Edwards, our business development manager.

Don't get caught without a licence

Using guarantors to pay rent arrears

Recent cases round up

Meet the team - Paul Slot

Acquiring a new business?
- Don't get caught without a licence

The licensed trade is not having an easy time at the moment and there is an increase in transfers of premises often at discounted sale prices.

If you are a first time trader make sure you can carry out licensable activity from day one.

A Premises Licence is required to sell alcohol at any time or to sell hot food or drink between 11pm and 5am. If you are buying a business check the licence conditions early on to ensure that it covers what you want. The licence will set out the times at which sales are permitted and any restrictions which apply such as requirements for door security. Don’t forget there may be other restrictions affecting the business such as planning conditions, covenants on the title or the terms of a lease.

If you are buying an existing business which includes the sale of alcohol, you must make sure you can nominate a Personal Licence Holder to take over immediately as the Designated Premises Supervisor. On completion of the sale, the Seller will resign this position to avoid being caught with responsibility for the new business. You will not be able to sell alcohol until a replacement has been nominated and it can take weeks to have the new Personal Licence Holder confirmed. Cafés and late night takeaways may need a Premises Licence but do not need a Personal Licence Holder if not selling alcohol.

With businesses struggling at the moment, it is important when taking over empty premises to ensure that the previous owner hasn’t been declared insolvent as this will immediately revoke the Premises Licence. This can be disastrous as it takes many weeks to apply for a new licence. Some areas of Brighton and Hove are designated a Cumulative Impact Area, which means there is a presumption against granting any new licences.

There are many business opportunities in the market, but talk to us early so we can check the licence position and any trading restrictions to help ensure your trading start is not delayed.

Paul Slot specialises in licencing matters and licenced premises. If you have any questions then please contact him. .

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Using guarantors to pay rent arrears
- points to note

In the present economic climate, more tenants are struggling to pay their rent. What should a landlord do? You will be familiar with the main options available, but we thought it worth setting out some important points to remember when considering calling on a guarantor.

If there is a guarantor, the landlord can of course call on them to pay up. There are two crucial points to remember here.

First, if the guarantee is under an authorised guarantee agreement and the guarantor does pay the sum in full, it will then be entitled to call for an overriding lease at any time within 12 months.

This is a lease that would be for the same term as the current lease, plus three days, and otherwise on the same terms as the current lease. It effectively sits above the existing lease, so that the guarantor becomes the landlord’s immediate tenant and the existing tenant becomes the landlord’s subtenant.

Secondly, a landlord can only demand sums from a guarantor under an authorised guarantee agreement which are no more than 6 months old.

If a rent deposit is available and the deed terms allow it, you can draw down on the deposit held. The deed terms should then require a tenant to top up the amount used. This could assist in getting around the 6 months time limit referred to above (if the deposit covers all of the debt), as the guarantor will then be required to repay the deposit sum rather than the old debt.

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Recent cases round up
deposits and enquiries

Landlords of residential tenants: Make sure you fully comply with the Tenancy Deposit Scheme rules.

A landlord was required to pay three times a deposit amount after it failed to give its tenant all the information prescribed by the tenancy deposit scheme rules. As you will know, these were introduced in April 2007 and provide that all deposits must be safeguarded by one of three Government approved schemes and landlords must also give full information about the deposit to their tenants.

In Suupere v Nice, the landlord informed the tenant about the amount held, the name of scheme holding the deposit and the reference number. But, they did not tell the tenant the circumstances in which the landlord could withdraw the deposit nor did they provide a certificate signed by the landlord confirming that the information in it was accurate.

This was in breach of the rules and the landlord was fined. This was in spite of the fact that at the time of the court hearing the landlord had returned the deposit in full to the tenant. The court considered that although the finding may appear harsh, the landlord should have put its house in order in time.

Replies to enquiries – you could be liable for misrepresentation if you don’t update your replies before exchange.

In Cleaver v Schyde Investments Ltd, a buyer wanted to develop a property for housing. The seller replied to enquiries about applications for planning permissions by saying “There are none”. The introduction to the enquiries contained a statement that the seller would inform the buyer of anything that would change its replies before exchange.

Two days later, the seller became aware of a planning application from a third party to develop the property into a medical centre, and the seller did not tell the buyer about this. After exchange, the buyer found out about this application and sought to rescind the contract.

The case went to Court of Appeal and upheld the buyer’s claim, rescinding the contract.

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Meet the team - Paul Slot
but did you know ...

Many of you will have met Paul Slot our lead Partner in commercial property matters, but did you know ...

He can put on a show! Paul advises the Lewes Bonfire Celebrations on safety issues and is a qualified British Pyrotechnic Association professional display operator;

He likes a drink! Paul specialises in licensing law, has been legal advisor to the Worthing Licensing Committee and has dealt with many successful licencing applications. He often gets behind the bar at local charity events.

He can still play the field! Paul is a keen rugby fan and season ticket holder at Harlequins Rugby Club and regularly turns out for Charity Games.

He’s a local’s local man! Paul was born in Hove, studied law at the University of Sussex, and lives in Lewes. Paul is lead Partner for our Commercial Property and Business Law team.

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www.bbc-law.co.uk

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