Letter of Intent to Exercise Right of Renewal

[SwissKiwi]

Morning people,

Would anyone have a template for this type of letter?

I need a tenant to sign one to firm up their intentions to renew.

Also - I'm trying to find in my books/leases the time frame in which this intent must be signaled by the tenant.

Is there a standard ADLS number of months for this?

Many thanks!
SK

[Davo36]

I don't have a template for it. Just type up a letter of your own, should be fine.

Of course the proper thing is to have a Deed of Renewal done but that's pretty formal.

The timeframe is 3 months. Used to be in in the ADLS Deed of Lease, haven't read it for ages.

[Ivan McIntosh]

Davo,

Still 3 months in the latest edition (clause 33), but if you're under that mark then don't fret, you as landlord can still accept a notice of renewal. Mutual agreement trumps everything.

A letter from the tenant simply saying "We give notice that we are renewing our lease of [premises]" will do the trick. Make sure they all sign it if there are more than one.

[Ivan McIntosh]

PS I would do a Deed of Renewal if I were the landlord. The tenant still usually pays for it, and it looks good when comes time to have the property valued or sold. You get them to commit first with the type of letter in my above post, then send through the Deed of Renewal. Usually the tenant will be paying (but check for variations to the costs provisions).

Deeds recording rent reviews, on the other hand, seem kind of a waste of time to me even if they are easy fees. Overkill really. The change to the rent is shown by the tenant paying it.

[Perry]

I agree with Ivan. Get it done indeed.
Most any such Deeds can be re-cycled
with no more than a few name and
date tweaks. Good investment.
.

[Ivan McIntosh]

I should add here that a deed of renewal is essential, rather than just preferable, when the tenant is a company with personal guarantors. A renewal letter on company letterhead is no substitute for a guarantor's witnessed signature on a Deed of Renewal.

[properdi]

Yes, most of the time if the tenant is on a standard Deed of Lease - the cost of preparing a renewal deed is on the tenant, unless this has been altered at the start?

As Ivan said, when you come to get the property valued or you sell it - having current deeds in place is more advantageous than just company letterhead confirming the renewal.

Gerard
Founder
Properdi Limited

[Flyover]

What about if we haven't filed a notice of intent in time? We are tenants who overlooked the requirement to do this. The landlord now wants to enter into a new agreement with a longer term of lease (we would prefer to retain the former lease). Do we have a leg to stand on?

[Ivan McIntosh]

You're on shaky ground, but all is not necessarily lost.

If the landlord refuses to recognise your renewal you are out of the safe world of contract and into the changeable world of judge-made common law. My recollection is that a judge will usually give effect to the renewal even if it's a bit late, but you will need more certainty than that, and that will require getting a lawyer to look at the most recent cases.

Has the term actually expired yet? That would be a very important factor.

[Flyover]

Sorry about second post - my browser was freezing. We are now past the end of the previous term. We are guilty of being a bit naive, and in previous reviews (we have been here since 1998 and most recent lease has been in place since 2003), the term has been rolled over by the landlord without any exchange of letters. We have discussed it face to face, but he is firm on 5 years, while we want 2.

[Ivan McIntosh]

Strictly speaking you are now on a monthly tenancy which can be determined at relatively short notice by either party. Without researching it, I can't tell you whether you'd have any chance of getting a judge to recognise and give effect to such a late renewal, sorry.

One quite positive argument in your favour would be the past practice of rolling over without exchange of letters. Has it been the same landlord the whole way?

[Flyover]

Yes it has. I appreciate your comments - thanks.

[Ivan McIntosh]

Wondering how this is turning out for you...was talking it over briefly the other day with a business broker who had had the same problem you do, and when his lawyer of the day looked into it the case law had definitely swung in the tenant's favour. Had a bit of a skim of some cases and it seemed to be that the landlord was more or less compelled to make a positive offer of a renewal and see what the tenant wanted to do before the tenant could be said to have lost its renewal right.

Now, I'm not saying that is the present law with any certainty, as it was a quick look in a spare moment, but it certainly seemed positive as far as I went. How are you getting along?