Delivering Quality Legal Services since 1996

Delivering Quality Legal Services since 1986

The Eight Steps of a Commercial Lease

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Here are some of the important key steps to be aware of when taking a commercial lease, these points will assist you through your own lease process.

  1. Negotiation

During this initial negotiation stage, the parties will usually set out to agree on a few key terms upon the lease to be based. These key terms are known as “Heads of Terms.” If a commercial agent is involved, they will usually be the ones looking to establish these key terms.

Although these key terms are created for the purpose of being the base for the lease they are not legally binding and as so do not form any type of contractual relationship between the parties. They are therefore treated more like statements of intention in practice.

  1. Instructing solicitors

Once the heads of terms have been agreed upon it is usually time to move to the next stage. This would be where you would inform the solicitors you want to act for you. You would also have the head of terms circulated to those solicitors and let them know you are ready to proceed with the creation of the lease.

  1. Client care and identification checks

After the solicitors have been instructed, they will begin their anti-money laundering checks before they go ahead to the actual work. This will require you to provide your ID to them, so they are able to undertake the necessary checks in accordance with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the Money Laundering Regulations 2017). You should therefore provide your ID to your solicitors as soon as you can to get the process moving along.

While you provide your ID, the firm with provide you with their terms and conditions as well as charges usually in the form of a letter you can sign to show you understand and accept those. Once these steps have been completed you can progress to the next stage.

  1. Draft papers

The next stage would be for the solicitors to confirm with each other they have been instructed to act on either side. The landlord’s solicitor will provide the draft lease bundle which usually includes the first draft of the lease along with the CPSEs (which are recipes to pre-contract enquires). While the landlord’s solicitor prepares this, the tenant’s solicitor will be liaising with their client if they require any searches to be done on the property to satisfy any concerns they have. There is no requirement to have searches done but it Is important to consider them as they can provide valuable information.

  1. Due diligence and negotiation

Once the draft papers have been issued, they will be reviewed by the tenant’s solicitor who will report back on them to the client. Then amendments will be made to the lease and sent back. The landlord’s solicitors will also make amendments and the documents will be passed back and forth with amendments until a version is acceptable by both parties. This process can take anywhere between 2 – 4 weeks depending on the circumstances of each transaction.

  1. Report on lease

Once the terms of the lease and associated documentation have been agreed upon, the tenant’s solicitor will typically prepare a report on the key terms of the lease for the tenant’s approval and records. This report serves as a summary of the overall terms of the lease, highlighting the key obligations of both parties, and will act as a useful reference for the tenant in understanding and fulfilling their responsibilities under the lease moving forward. The report should not raise any new or surprising information for the tenant, but rather serve as an aid for the tenant to review and understand the overall terms of the lease.

  1. Completion

Following the finalisation of the lease documents, they will be circulated to all parties for signature. Once all parties have signed and returned the documents to their respective solicitors, and the tenant has made any required payments such as advance rent or a deposit, the matter will proceed to completion. Completion usually takes place during a short telephone call between the parties’ solicitors, during which the lease is agreed to be completed and dated.

  1. Post completion

After completion, the landlord’s agent will be instructed to release the keys to the tenant, who will then take possession of the premises and will become liable for complying with the terms of the lease. The tenant will be able to move in and start using the property according to the terms agreed in the lease. The lease will also need to be registered if it is for a term longer than seven years. You will also need to ensure that if there is SDLT to pay, then it is settled along with any other required payments.

If you would like assistance in the drafting of your own lease then call us today, on 0121 268 3208 or send us an email at with your query and we will get back to you.

Please note that this blog is not intended to be legal advice. This material has been prepared for informational purposes only and as general guidance. Is not intended to provide, nor should it be relied on for, legal or tax advice. You should consult your own advisors or seek professional independent advice before engaging in any transaction.





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