Richard, could you first explain what types of property notices your team regularly deals with?
In relation to commercial leases: forfeiture and repair notices, break notices and notices under the Landlord and Tenant Act 1954;
In relation to land agreements: option and rescission notices;
In relation to residential leases: right to buy, possession and enforcement notices.
What exactly does the work entail?
The starting point is to understand the objective behind serving the notice in the first place. It may be that the ultimate goal of serving a notice can be achieved by other means or that the consequences of serving that notice have not been fully considered.
Usually, there will be a response to the notice and further action to take. Therefore a strategy needs to be in place before the notice is served, working out how to deal with any repercussions.
Considerations will include: What will the notice do? What are the consequences of serving it? Will a liability arise following the service of the notice? Is it better to take different or further action?
Secondly, the actual drafting and serving of the notice requires an understanding of the relevant contractual, common law and statutory provisions regulating property notices. This includes understanding:
Who can serve a notice?
On whom can a notice be served?
When can you serve the notice?
Do you need to do anything (e.g. pay any monies, secure planning permission) before serving the notice?
How can you serve the notice?
If these questions are not properly addressed, the notice may not be valid. The volume of case law relating to this area of law reflects how often the drafting and service of property notices goes wrong.
What can be the consequences of getting such notices wrong?
Getting a notice wrong could mean that you are tied into a lease for several years, having to pay tens or even hundreds of thousands of pounds of rent. It could mean losing out on a development opportunity worth millions of pounds.
Let me give you an example:
You are a tenant company occupying seven floors of an office block in the city centre. The rent for each floor is £50,000 per year. Each floor is held under a separate lease.
You have lost some important service contracts and need to downsize your office space as soon as possible. You have already let certain employees go.
Your leases end five years from now, but you have break clauses in your leases allowing you to break the leases next year.
You have tasked your FD to serve break notices for four of the floors. The FD sends a letter to the landlord named in the company’s leases stating that the company will break four of the leases next year. However, the landlord named in the leases is no longer the company’s current landlord and the notice is invalid.
The company therefore misses a vital opportunity to reduce its rental liability by £800,000. It also remains liable for service charges, insurance premiums and business rates for a much larger space than it needs to occupy.
What would you advise someone who is concerned that a property notice they have sent is wrong?
You should seek legal advice from professionals who specialise in this type of work as soon as possible.
All may not be lost – there may still be time to re-serve a notice. Even if that opportunity has gone, there may be a range of strategies open to you to mitigate potential losses or liabilities.
What would you advise someone considering serving a property notice to do?
Again, you should seek legal advice from professionals who specialise in this type of work. The property litigation team at Shulmans regularly deals with property notices and would be happy to assist you.