21 October 2013

Commercial Lease Renewal following Partnership breakdown

Following the breakdown of a partnership, if one partner continues to run the business in a commercial property, then the question arises as to whether that partner on their own can rely on security of tenure under the Landlord & Tenant Act 1954 (LTA 1954) in order to seek a renewal of that commercial lease.

Where a tenancy is vested in joint tenants, the normal rule would be that an application for a new lease would have to be made by both of them. However, there is an exception to this rule provided by Section 41A of the LTA 1954 in relation to partnerships. This section sets out specific requirements for a situation where the joint tenants were formally in a partnership.

In this situation an application for a new tenancy does not need to be made by both of the partners, and can be made solely by the partner who has remained in occupation of the premises for business purposes, provided the following criteria applies:-

1. The tenancy is held jointly by joint tenants.

2. The property includes premises occupied for business purposes.

3. A business was at some time during the existence of the tenancy carried out as a partnership by all the joint tenants (or by all the joint tenants and third parties) and the joint tenants’ interest in the premises was then as the partnership property.

4. The business, or some of the business, is now carried on by only one or some of the joint tenants, either alone or in partnership with others, and the other joint tenants do not occupy any part of the property for business purposes.

Where the criteria set out above apply then the tenants for the purpose of renewal of the tenancy under the LTA 1954 will be the remaining partner or partners only. This means that they can take advantage of the rights under LTA 1954 in order to apply for their lease to be renewed.

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Andrew Cave, Partner
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