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Aborted commercial tenancy on day one.

Posted: Tue May 10, 2016 1:45 pm
by Dartmouth
Where do I stand on a commercial letting where we'd agreed written terms, rent was paid in advance, Lease wasn't signed and Tenant changed his mind and wanted his money back in full?

I recently advertised a small shop to let and started negotiating with a prospective tenant last week. Things progressed very quickly and I drafted a 6yr BPF Lease on Friday. In the Lease, the rent was £975 per month in advance with a further payment of £975 payable at the start of the Lease for the last month's rent, whenever that may be.

Later that day, I texted the prospective tenant to check that he'd read the draft and wanted to proceed on that basis, which he did. He wanted to meet and sign-up immediately so I told him that, upon signing, I'd need the rent to be paid in cash or by bank transfer - and gave him my banking details. Within a few minutes he texted me with the words, 'Deposit is in your account', which I had read to mean that he'd made the deposit.

An hour later, we met in a local Costa Coffee to sign-up. Realising that the signings needed to be witnessed, and we didn't know anyone in that shop, we both agreed to leave the signing until the Lease start date on Monday when we would meet in my friends cafe where he could do the witnessing. We then parted company taking our respective copies of the Lease with us.

On Monday we met again, but he forgot to bring his Lease and we just shrugged it off and said we'd do it in due course. Meanwhile we went down to the shop to get the keys from he outgoing tenant. Unfortunately, he'd just left to take the last of his rubbish to the dump but he left the back door open so the new tenant could get in, which we did. We then went around the shop so I could familiarise him with the shop's electrics and plumbing etc and he was telling me what he was intending to do and if there would be any restrictions as to decor etc. I told him that it's now his shop to do exactly what he wanted with - apart from anything structural. After that, he said he'd be happy to liase directly with the outgoing tenant for the keys and we went our separate ways.

Later that day at 3pm, he said that he still couldn't get the keys so I called the old tenant who confirmed that he'd be back with them in 10 minutes and passed that message on by voicemail and text.

At 8pm the new tenant phoned me to say that he'd been in touch with the local Planning department who told them that his proposed use (warm food) would require a change of use - and he hadn't bothered to go back for the keys.

The following morning the new tenant texted me to say that he'd 'made a big mistake' and demanded all his money back. I replied saying that I would re-advertise the shop and reimburse him proportionately if I managed to complete a letting within 2 months as he'd paid for the 1st and last month's rent. He said that he would only allow me to keep 2 weeks rent and I later offered a compromise whereby I would not take more than 1 month - regardless of whether I managed to rent the shop or not.

Please could anyone help me with a legal opinion on our respective arguments?

Thank you.

Re: Aborted commercial tenancy on day one.

Posted: Fri May 20, 2016 12:40 am
by Conveyancer
I am afraid you have no valid claim aginst the "new tenant".

There are two bits of law that are against you.

The first is that the grant of a tenancy for a term exceeding 3 years must be made by deed. Since the lease was not signed you never granted a tenancy.

The second is that a contract for the grant of a tenancy for a term exceeding 3 years must comply with section 2 of the Law of Property (Miscellaneous Provisions) Act 1989. That effectively means a formal contract signed by both parties.

Since you have neither tenancy nor contract for a tenancy the "new tenant" is under no obligation to you at all. The moneys you hold are not supported by any legal arrangement and should be returned.

Re: Aborted commercial tenancy on day one.

Posted: Fri May 20, 2016 2:21 pm
by Dartmouth
Thank you for clarifying that Conveyancer.