Break clauses – an opportunity for extortion?

Break clauses – an opportunity for extortion?

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The question: Do landlords and property agents conspire to make it difficult for a tenant to perform exactly the break conditions of its lease – then claim the lease continues because of a technical breach – and finally gets the tenant to agree an “extortionate” payment to cancel the continuing lease and stay out of court?

The facts: A 10 year office property lease had a 5 year break clause which required a 6 month pre-break notice period and a penalty payment of 6 months rent. The tenant gave notice as required, negotiated with the landlord’s agent a dilapidations settlement to cover breaches of repairs covenants etc. and requested an invoice for this and the rent penalty. The landlord instructed the agents not to send an invoice for the penalty and prepared but did not submit an invoice for the dilapidations. The break date was 24 December. An arrangement had been made to meet the agent to inspect the property and pass over the keys – and, the tenant assumed, receive and pay these final invoices. Despite phone calls the agent did not turn up or give any explanation. After Christmas the tenants were advised the leases continued for non performance.

Why we are asking: The cost and uncertainty of going to court might coerce some (or most?) tenants into taking the more certain (though costly) route of giving in and settling rather than challenging on the grounds of obstruction. It would be helpful to know of other similar cases. [email protected]

Clifford Peat

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By CJP
17th Apr 2008 11:08

Thanks Mark
In our case the landlord is a well known bank and the agents and lawyers "speak nicely and wear suits" - but it comes down to the much the same thing as you describe.

Thank you for taking the trouble to share the sorry tale of your client - I suspect there are many more out there and would like to hear from others.


Cliff

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By User deleted
15th Apr 2008 14:00

Sounds familiar
The terms "con merchants" "rogues" and "scum" come to mind in this scenario.

I had a client who, on a technical point, was denied the promised early termination of the lease. Shylock the landlord pointed out that the notice terms were not complied with, so the client (tenant) had to serve the full 10 years "sentence" in unviable premises. Shylock's agent didn't mention the techicalities to the tenant when the lease was entered into, and perhaps the tenant's solicitor didn't either.

Then towards the end of the ten years some dodgy claims for insurance premiums (inconsistent renewal dates no proof of premium amount - probably inflated by Shylock & his agents) came about plus unfair service charge / dilapidations claims.

The client settled, as by this time of pension age, too stressful to pursue/ defend herself.

If the same thing happened again nowadays I think I'd make a money laundering report - the suspected crime being landlord &/or their agents obtaining money by deception. If enough people of conscience did this then SOCA might investigate the dodgy landlords with dodgy agents.

PS. My case was a retail property in Bilston (West Midlands) with landlords agents based in Wolverhampton. I believe "Shylock" was a Ltd Co with Shylock as director.

The motto is "trust landlords and their agents as far as you can throw them". Forewarned is forearmed.

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