Healy O'Connor

Commercial Leases

Negotiating a Commercial Lease for a property can be a tricky business. Before legislation was enacted

in 2009 all Commercial Leases were subject to Upward Only Rent Reviews every five years.

This means that after five years the rent went up. Since 2009 there is now provision for rents

to be negotiated downwards as well as up. Of course, this remains the case even though

the commercial property market is now stabilising.

The recent Supreme Court decision in the Bewleys case was the decision that current

tenants have been patiently awaiting. The background to this case is that Bewleys signed

up to a 35 year Commercial Lease with five yearly rent reviews from January 12

th, 1992. When the rent

came for revision in 2007, before the crash, the rent was reviewed at €1.46 million, which

has been described as “oppressive” by lawyers for Bewleys.

Mr. Justice Peter Charleton in the High Court agreed that there was ambiguity in the Lease

which essentially meant that it could be interpreted either in favour of Bewleys or the

Landlord. The case went to Arbitration without success before going to a five Judge

Supreme Court, who unanimously found in favour of the Appeal by the Landlord.

Essentially, what this means now for Tenants is that there is some closure and that the best

way to renegotiate the terms of a Lease is to talk directly with your Landlord. Depending on

the property that you are in and your financial situation a Landlord may look at it and take it

back or allow the rent to be renegotiated. Please bear in mind, in light of the Supreme

Court Ruling, that he is under no obligation to do so and that you are tied into any signed

Lease, draconian or not.

It goes without saying that all the terms of a Lease should be closely looked at when you are

negotiating commercial property but in particular there are certain terms that must be

forensically examined, one of which is the rent review clause and how that is to be

negotiated in the future.

Shane Healy

Commercial Property

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