Glossary of Terms

Assignment

The transfer of the tenant’s interest to another party.

Break Clause

A right to bring the Lease to an end early. These can be expressed to be exercised solely by the Landlord or the tenant or both depending on what the parties agree.

Dilapidations

Refers to a state of disrepair in a property where there is a legal liability contained in a lease relating to the condition of repair.

Easement

A right over land such as a right of way, right of light or a right of drainage.

Enfranchisement

The process by which a tenant of a residential property exercises a legal right, created by statute, to acquire the freehold title to their property.

Guarantor

Someone who takes responsibility for someone else’s debt or obligations and guarantees that they will be paid or carried out.

Heads of Terms

The key terms agreed between parties prior to substantial documentation being prepared by solicitors e.g. purchase price, rent, lease term etc. These are not usually legally binding.

Indexed Rent Review

A rent review whereby the new rent is determined with reference to rises in inflation.

Market Rent Review

A rent review whereby the new rent is determined with reference to how much the Landlord could rent the premises for if it were on the market.

Option agreement

A right to acquire someone else’s property (a “call option”) or (less commonly) to make someone acquire your property (a “put option”).

Overage agreement

An agreement where a payment is to be made some time in the future in the event of planning permission being granted on a piece of land or some other contingency occuring.

Party Wall

This can be either:

• a wall that straddles the boundary above ground level and is part of a building, or
• a wall that does not straddle the boundary but nevertheless separates buildings belonging to different owners.

Possessory Title

Arises where a person has in certain circumstances been in possession of land, without having a legal title, for a length of time such as to become recognised as the legal owner of the property.

Rent Deposit

A deposit lodged with a landlord as security against non-payment of rent or breaches of the terms of the lease. This may need to be held in a separate account.

Restrictive Covenant

A restriction on the title of a property affecting how a property can be used and enjoyed.

Service Charge

The amount that the tenant has to pay to the landlord for maintaining and repairing common parts of the building such as structural parts or areas of an estate used in common with other tenants.

Statutory Right of Renewal

Under the Landlord and Tenant Act 1954 it is presumed that in certain circumstances a tenant of business premises has an automatic right to renew their lease at the end of the Term unless the Landlord can raise specific grounds for objecting to this. This right can be excluded by means of service of a notice and the making of a declaration by the tenant acknowledging the notice and stating that they are aware of the exclusion.

Term

The length of time for which a lease is granted to the tenant.

For more information on commercial property law please contact the Southampton team on 02380 717414 or email deniseoatham@warnergoodman.co.uk or the Portsmouth team on 02392 776503 or email clairebattye@warnergoodman.co.uk