My corporate real estate seat: Golfer’s warning ………FOUR!!! (Tenancy Agreements)
In this week’s edition of Cripps Pemberton Greenish’s very own trainee solicitor blog, Aleks Wulff tells us what it’s really like to work in the busy corporate real estate team.
Starting Corporate Real Estate (CRE) I had been told that I would get “a lot” of client contact, but I don’t think you can appreciate this until you actually experience it. Four months in commercial property will massively develop you as a future lawyer and I would highly recommend undertaking such a seat. During my time, I worked on numerous matters and there was a great mix of smaller matters which you take responsibility for and run on your own, and larger projects which expand across several different departments. It is the latter I am writing about here and hopefully it gives you a taste of what you might find yourself doing as a trainee working on a large CRE project.
Cripps Pemberton Greenish CRE and corporate team were instructed by the owners of a major golf course who had put the business up for sale and had an eager (but prickly) buyer. I was tasked with answering all the buyer’s property due diligence questions relating to the golf course. Initially, this was a real research task and involved entering the dreaded “Data Room”. Official copies, property plans, planning permissions, tenancy agreements, easements, irrigation systems, golf course service agreements, utility bills …it’s all there and your job is to respond to each buyer question by locating the relevant information, deciphering it and writing a legally and commercially accurate response.
Obviously, this can be daunting at first but slowly it all starts to fit into place and you begin to build a picture and before you know it you’re answering these queries with confidence. Then the surprising thing happens – you as the trainee become the “go to guy/girl” for everyone – your own team, corporate, the buyer and even the client! It is a great way of building up your client management skills.
So all was going well and the deal was on track when it was discovered that there were four tenancy agreements that had not had their statutory rights of renewal properly excluded. Under the Landlord and Tenant Act 1954, a commercial tenant can have the right to remain at a property even after their contractual lease has come to an end. This is because the law ‘protects’ their tenancy unless this is specifically excluded. All of the tenants had signed one year leases and expected to leave after that period. Nevertheless, the buyer was not satisfied and feared that if they needed to make major developments to the golf property they would be tied down by these tenancy agreements for an indefinite period. A multi million pound business sale now hinged on these four tenancy agreements.
I was tasked with ending the current tenancy agreements, and getting new agreements executed which properly excluded the 1954 statutory protection. This was a delicate procedure and required the client and I to liaise with each tenant, talk them through the situation, terminate their existing lease and simultaneously enter them into a new lease. The documentation I had to draft included:
- Four deeds of surrender;
- Four tenancy agreements; and
- Four statutory declarations excluding the LTA 1954.
Each tenancy agreement was different (e.g some tenants paid a fixed rent others paid a turnover rent). Similarly, each tenant had their own concerns and demands. Getting these agreements properly executed required real negotiation skills and an ability to explain rather complex legal problems in plain English.
The end result was that each tenant was granted a new full one year lease (with no rent increase) from the same date they surrendered their existing ones. Each tenant was very happy with this outcome and we got all the documents fully executed within two weeks. After these tenancy agreements were in place the buyer was happy to proceed. A week later the multi million pound sale completed.
Getting these tenancy agreements over the line meant getting the whole deal over the line and that responsibility fell to me as a trainee. Throughout it all I had supervision and could always ask questions but that level of responsibility was something I never could have predicted when I joined CRE.
The experience was brilliant and no doubt developed me as a future lawyer. The best part about CRE is that this story isn’t necessarily unique – most trainees will experience something similar and be in charge of some really ‘meaty’ files / projects. I didn’t think property was for me but these last four months have definitely taught me to have an open mind and so should any trainee. Be prepared to work hard but know that (more often than not) the work can be really rewarding.
Good luck to all Cripps Pemberton Greenish’s new trainees!