Our commercial property team specialises in commercial lease advice for smaller and medium Jersey businesses.
Entering into a business lease can be a complicated process that involves several different legal issues.
Jersey Commercial Leases | Business Leases
As a Jersey business, you really cannot afford to rent or lease Jersey commercial property without the assistance of an experienced Jersey commercial property lawyer.
A business lease can be a complicated process that involves several different legal and other issues. Protecting your business’s interests is vital.
A business lease is more than just about paying rent. As the landlord’s advocate drafts the lease, it will generally be in favour of the landlord’s interests. Therefore, commercial tenants need to be aware of such provisions and should not lightly enter a Jersey commercial lease without understanding the terms and obligations set out. Entering into a commercial involves a significant financial commitment, so it’s vital you get it right.
We specialise in small and medium Jersey business advising commercial tenants, but regularly act, and have acted for numerous Jersey business tenants and landlords. Our clients range from state-owned businesses such as Jersey Post, through to new startups and entrepreneurs.
What is a lease?
It is a contractual document that determines the relationship between a Jersey property owner and a commercial property tenant.
What areas does a Jersey business lease are normally cover?
The key areas in a Jersey business lease will be: Rent and Service Charge, Use of the Premises, Repairs and Decoration, Alterations, Assignment or Subletting, Insurance. There will be other issues that may or may not be important issues for the tenant or landlord.
Is there a typical length of term for a business lease in Jersey
In general terms, business leases are typically granted for a term of 9 years. If a business requires a term over this period, it requires a formal registration in the Royal Court which attracts a stamp duty.
If my business decides to take over a commercial lease by assignment, can we negotiate the terms?
If you are taking over an assignment the Landlord may require you to step into the shoes of the existing tenant. This will, of course, depend upon the circumstances.
Does Jersey have legislation to regulate the relationship between the business landlord and business tenant?
A commercial lease in Jersey is governed by the contractual terms your business enters into. There is limited commercial lease legislation, regulation and or codes of practice to assist if an issue arises. It would be down to contractual terms.
Can the Landlord restrict how we can use the Jersey business premises?
The business lease will set out what you can use the business premises for. It is important to check this to ensure you are permitted to occupy and trade out of the premises under Jersey Planning law.
How is responsibility for repair and maintenance usually dealt with?
Generally, the business tenant will be directly required to maintain the property in good repair and decoration. As a business tenant, you are likely also to be required to pay a service charge to pay for.
As a business tenant, should I request a break clause?
This will depend upon your business requirements and whether you envisage a need to ‘break’ in the term. Having a break clause can provide a comfort should you need to ‘get out’ of the lease but one should also factor in the possibility the landlord may require a higher rental for provision of such a clause.
If my business needs to extend the Jersey business lease term, can I do so?
There is no Jersey statutory right to extend a Jersey business lease. If you enter into a lease of over 9 years which is registered in the Royal Court, you can contain provisions in the lease for this eventuality. If your lease is under 9 years and it contains such a clause, it would be unenforceable.
Should I enter into a personal guarantee under a Jersey lease?
As a company director am I obliged to give a personal guarantee?
It has become accepted practice in Jersey for Lessors to seek a personal guarantee from corporate tenants when entering into a commercial lease. While there is no lawful requirement for personal guarantees to be provided, the reality is that the provision of a lease without a personal guarantee is unlikely to be agreed.
Will I be released from my personal guarantee if I assign the lease to a new lessee?
Unless the Jersey lease specifically provides, there is no obligation on a lessor to release a guarantor. When negotiating the terms of a lease, particularly a long lease, it is important to consider this (amongst other issues) and make sure you agree with the lessor to include a clause to release the personal guarantor on assignment.
Will I remain liable under a personal guarantee if the lease term is extended?
In general terms you cannot be bound by or liable under a Jersey lease unless you have executed it. If the term of the lease is extended and you as a guarantor had not agreed to do, then its liability may not extend to the renewed term of the lease. However this is a general statement and you should always take legal advice on this point are there are exceptions to this general statement.
Can the lessor choose whom to take action or does the lessor have to action all the parties under the lease?
The lessor under a standard Jersey guarantee will be entitled to choose whom to action. It will come of no great surprise that the lessor is likely to assess whom, out of the lessor and or guarantor, has the stronger asset position and take action accordingly. Moreover if the lessor actions, for example the guarantor, and finds there is a shortfall, the lessor will thereafter be entitled to pursue the lessee for the balance.
Comment
Great caution should always be taken when providing a personal guarantee under a lease (or otherwise). It is not a document you should sign without legal advice.
We pride ourselves on the long-standing relationships we have with our clients. Our size of law firm means we offer highly personalised service bespoke for each business client. Every client is important to us.
Whether you are seeking to take a lease of office space, a warehouse or a shop, we will work in partnership with you — providing you with the expert advice and assurance you need so you can get on with running your business.
