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Commercial Property Glossary

Acquisitions

A more impressive word for buying a property- generally used by businesses that acquire and sell properties as a substantial part of their main business.

Assignment

In commercial property terms this generally refers to the transfer of a lease between the current tenants to a buyer of that interest. A licence to assign is generally needed by the landlord to grant consent to the assignment of the lease.

Break Right

This term is generally used to mean a tenant’s right to bring its lease to an end. A tenant taking a 10 year business lease may wish for the flexibility of its business want to incorporate in the lease a right to end the lease after 5 years. If the landlord agrees, the right is inserted and known as a break right. To exercise a break right, time limits and conditions to exercise the right must be strictly adhered to. Legal advice is essential here. Landlords will sometimes have break right

Claw back

Is the payment of monies to a seller of land after an event has occurred which entitle the seller to payment under overage provisions agreed within the sale documentation.

Disposals

A more impressive word for selling- as with the definition of Acquisitions

Freehold

This is the superior interest in land. When someone indicates that they own the property, they will generally mean that they own the freehold, although in some cases, particularly in areas such as Sheffield where long leaseholds are common, a tenant under a long lease will say that he or she owns the land. There will however be an interest superior to that long leasehold, and this will be the freehold

Lease

A right to use and occupy property for a limited period of time- the term, usually in return for the payment of rent or, for a longer term for example 50 years plus, in return for payment of a premium (price) and during the term a lower rent, often referred to as a ground rent. The owner of a property who grants a lease is referred to as a landlord, and the party taking a lease is referred to as the tenant.

Land Registry

The centralized body which deals with the registration of land following every sale and purchase, or the grant of or sale of a lease of more than 7 years term. The Land Registry keeps computerised records of all land ownership in England and Wales other than estates which have not changed hands in years and are not yet registered. When property is registered, there is generally little need for “deeds” to be retained.

Lease Renewal

Taking a new lease of the same premises at the end of the term of the original lease. Often a new rent will need to be agreed. A business tenant under a lease which has the protection of the Landlord & Tenant Act 1954 has the right at the end of the contractual term to take a new lease, although this is to be at a market rent, which may mean a higher or a lower rent.

Overage Provisions

These are complex provisions which allow for the seller of land to extract further payments from a buyer of that land upon the happening of certain events, generally relating to the grant of planning permission for development and/or the sale on of that land.

Report on Title

This can either be a bespoke report on title prepared by us for a client on the purchase of a property/ grant of a lease (in which case it will be a report on lease) or the completion of a pro-forma document to a high street bank or building society on which the funder will rely before releasing purchase monies to us to enable completion. Bespoke reports to clients will be informative whereas reports to lenders just indicate that the title will be good and marketable, and all is in order with th

Stamp duty

Is the old name for Stamp Duty Land Tax

SDLT

The old name for Stamp Duty, but a more wide-ranging and complicated tax on which legal advice ought to be sought. Basically SDLT is payable on purchases of property above £125,000 for residential properties and £150,000 for commercial properties. Rates increase to 3% when the price exceeds £250,000 and then 4% over £500,000. There are further increases for residential properties. SDLT is also payable on rents under leases above a threshold figure.

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