How we assisted Burger Guys Ltd with the leases of their commercial premises

Background

Between 2019 to 2022 we advised Burger Guys Ltd (“Client”) in respect of their leases at three of their London sites:

• Site 1, Kentish Town – assignment an existing lease from current Tenant (2019)
• Site 2, Clerkenwell – acquiring a new lease (December 2021)
• Site 3, Covent Garden – acquiring a new lease (January 2022)

The properties were to be used as restaurants for the sale of high-quality French burgers.

How we helped our client

We acted on our client’s behalf and carried a full due diligence exercise on the property and reviewed the documentation.

Our work consisted of:

• Reviewing the freehold title including any registered restrictive covenants and advising our client of any onerous provisions; obtaining any consent letters required to the registration of the lease.
• Reviewing the draft Lease, Rent Deposit Deed and Licence to Alter; making amendments to the same to ensure reasonableness and highlight any onerous provisions to the client; agreeing a Schedule of Condition if required to protect our client against its repairing obligations; providing our client with a written report on the documents; finalising the documents and arranging signature on the same;
• Carrying out due diligence work, including reviewing replies to Commercial Property Standard Enquiries (CPSE) (General) 7 and (Grant of a New Lease) 3 provided by the Landlord’s Solicitor and reporting to our client on the same. Ensuring the Landlord provided all documentation required under regulations including, asbestos report, fire risk assessment, Energy Performance Certificate (EPC); reviewing insurance and service charge documentation; advising client on all matters they should be aware of before they complete the Lease and supporting documentation;
• Carrying out commercial property searches such as local land charges search, local authority search, drainage and water enquiries and environmental reports.
• Preparing a detailed written report to our client on the transaction, including title, searches and replies to enquiries; highlighting any concerns.
• Approving the Landlord’s Completion Statement; agreeing apportionments and obtaining completion funds from our client;
• When all parties were ready, completing the Lease, Rent Deposit Deed and Licence to Alter simultaneously and
• Attending to all post completion matters such as preparing a stamp duty land tax submission form, calculating stamp duty land tax due, filing the same with HMRC and registering the lease with Land Registry.

Main issues that arose for each lease deal and what we did

Site 1

The main issue that arose was the lack of a Schedule of Condition and costly repairs identified by our client’s survey. The client was extremely concerned that a Schedule was not attached to the Lease when this had first been entered into by the previous parties.

It is common for Landlords to serve Tenants with dilapidations claim at the end of the Lease and for Tenants to bear the cost of any repairs which can run into thousands of pounds. In the absence of a Schedule of Condition, there simply was no record of the condition of the property when the Tenant took the lease. This would have exposed our client to repairs that the Landlord could claim were our client’s responsibility when in fact could have been caused by a pre-existing defect that were not picked up by the previous Tenant at the time of entering the Lease.

To resolve this situation, we advised the client to negotiate with the Seller and reduce the purchase price payable for the leasehold interest to cover the cost of the works involved.

Site 2

The main issue here was the existence of a previous Lease on the freehold title which had not yet been removed. This related to the same property which was to be demised to our client under a new Lease.

We resolved this by insisting that the Landlord’s Solicitor arrange to close down this redundant Lease at the Land Registry and provide us with evidence of the same prior to completion.

Site 3

In this matter, the Landlord refused to allow our client to attach a Schedule of Condition to the Lease, leaving our client exposed at the end of the term.  Both parties reaching a stalemate position and the matter was not progressing as swiftly as our client had planned.

We then sought the assistance of our client’s property agent who liaised with the Landlord’s agent and managed to persuade the Landlord to agree to the Schedule of Condition.

Our client was extremely relieved and pleased to have resolved this so they could complete and take keys of the property before Christmas and allow their refurbishment works to start.