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What Rights Does a Commercial Tenant Have?

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The rights of commercial tenants are more limited than residential tenants; however, commercial tenants do still have rights. Commercial tenants may have the protection of the Landlord and Tenant Act 1954. The Act grants Security of Tenure to tenants who occupy premises for business purposes.

When the tenant operates the business then the landlord of shop that resides in commonly known as the head lessor, who is usually in a partnership with another figure known as the ‘principal’ will have the right to terminate the commercial tenancy agreement if the tenant’s business fails. The head lessor has the right to terminate a commercial tenancy agreement by using the ground of another business operator taking over the premises for his business.

A commercial tenant is protected by the Landlord and Tenant Act 1954 if he is a member of a partnership (which will be a limited liability partnership) that holds the premises as an office or shop. The act will protect him from eviction if the other member of the partnership decides to stop operating the business and to let some other person operate it. However, the landlord can terminate the tenancy agreement if he can prove that the tenant or the partnership failed to provide the services for which the premises were let and the failure rendered the tenant unfit to carry on the business for that purpose. This condition can be included by the head lessor in the lease of commercial tenant.

Any deterioration of condition will not generally allow the head lessor to end a commercial tenancy agreement. Therefore, the landlord does not have the right to terminate a commercial tenancy agreement due to the dilapidated conditions of the buildings.

If a commercial tenant contravenes the tenancy agreement then the landlord has the right to terminate the agreement by notifying the tenant 14 days before the termination of the tenancy agreement. The landlord can also terminate the tenancy agreement by giving the tenant a written notice stating the end of the tenancy agreement and the latter is liable for the landlord’s costs incurred in finding a new tenant.

However, if the tenant wishes to terminate the commercial tenancy agreement then he will need to give to the landlord notice 3 months in advance if the tenancy agreement is a fixed term agreement and if the tenancy agreement is an open-ended tenancy then the tenant has to give a notice of intent to leave before termination. The tenant will have to pay a ‘break fee’ to the landlord if the landlord is entitled to the possession of the property. For example, where the tenant fails to carry on the business of a shop, the landlord will be entitled to terminate the tenancy agreement and will receive a break fee of 3 months.

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