Long Term Lease - Can I walk away?

M

MonaghanMon

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I stupidly signed up for a 35 year lease for a business premises, 5 years ago. My business is doing fairly well. My Rent Review is due and the Landlord has offered to keep the rent the same due to the economic downturn. I have threatened to leave if he doesn't lower the rent. He has informed me that under the terms and conditions of the lease I cannot leave and is threatening me with court action if I "break the terms and conditions of the lease". What does this mean in real terms? My own Solicitor has told me that the Landlord can't get me for anything and that I would be as well off to just walk away. Friends are advising me of the same. Where do I stand? I am in a position to buy a property at this point - why should I keep paying somebody elses mortgage when I should be buying my own place? If I leave, will my actions come back to haunt me? Any "experienced" advice would be of help. Thanks.
 
Surely any "experienced" advice should come from your own solicitor who no doubt has perused the lease and given you his advice. some leases have "break" clauses which allows each party to terminate the agreement.
 
My Solicitor says that since I have no assets, there's not much that the landlord can come after me for. Apparently, there is no "break" clause in the Lease.
 
You signed a lease with the LL and the LL exchanged your security of tenure for his security of income-a fair and reasonable deal. If he wanted to boot you out and you did not have the funds to buy somewhere else I dare say your feelings on the subject would be somewhat different and I dare say you'd take legal action against him, which would be reasonable for you to do.

Now, as to whether you can get away with breaking the contract without financial penalty that depends. If you personally signed the lease in your own name (as opposed to your business) then your solicitor should be very careful about what he tells you. Even if you have no assets right now, a judgement lasts for many years and if you (for example) bought a house, a charge could be registered against your mortgage so you would be unable to sell without discharging the debt.

30 years lost rental income is a lot of money and may well be worth the LL persuing on the off chance he'll get it out of you. It's not fair of you to have signed a 35 year lease and now saying "why should I pay his mortgage (if he has one)?". You have your business-the landlord has his.
 
I know someone who effectively became a bad tenant (late with rent, paid in dribs & drabs) and the landlord did let them out of the contract.

Now located in a newer, larger, cheaper place, with get out clauses.
 
My personal situation has changed since I signed the lease - I am now married. If my wife and I were to buy a place in her name only, can the LL still come after us? I signed the lease in my own name - my business is the same name. I didn't realise that he could in fact sue me for 30 years rent!
 
I doubt very much I'll have much luck in subletting it in the current climate.
 
MonaghanMon said:
My personal situation has changed since I signed the lease - I am now married. If my wife and I were to buy a place in her name only, can the LL still come after us?
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If the property actually belongs to you than you can't easily hide it like that.

MonaghanMon said:
I signed the lease in my own name
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If you signed it in a personal capacity (no company seal on lease I presume?) then you are personally liable, not your company.

MonaghanMon said:
I didn't realise that he could in fact sue me for 30 years rent!
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That's fair enough but you did actually sign a contract in which you agreed to pay rent for 35 years and the landlord exchanged this for security of tenure for the same period. The Revenue considers long leases (over 1 years) to be an intangible asset to the lessee and in fact levies VAT on them! You now wish to not pay rent anymore and in the current climate the LL may not be able to get it tenanted again in a hurry. He would be able to come after you for lost income while it's vacant and his costs in getting a new tenant in. One would hope you would not be liable for the whole 30 remaining years of course.

There is a game of brinkmanship to play. The LL may yield on your demand for a rent reduction if he truly believes you will leave as he will not want to endure the expense of legal action. Are you a good poker player? These things are best sorted through dialogue-not in court (where only the legal eagles win) and unless your LL is stupid he/she will know this too. It may take some tough talking in your behalf and beware that your LL may read these boards so keep the discussion vague enough or say no more. You have no position to bargain from if you disclose your intentions here and then your LL reads it! Best of luck.
 
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