It is always a
concern to a landlord to be able to recover from the tenant the rent or other
payments which the
tenant has agreed to pay under the terms of the lease. It is not only the rent
that may be due but other payments may have to be made - for example, if the tenant
breaches its repairing obligations then the landlord may have to carry out the
work itself and recover the cost from the Tenant. Plainly the landlord will
have a right to enforce payment through the courts but this is time consuming
and costly - and will achieve no satisfactory result if the tenant does not
have the ability to pay.
There are two options
to consider to assist with this problem. The first is taking a deposit from the
tenant as security and the other is to get a guarantee from a third party.
These options are particularly important to consider if the tenant is a newly
formed limited company.
Security Deposit
The document we
provide envisages that the tenant will pay to the landlord a sum of money which
the landlord holds in a separate deposit account. The interest that accrues on
the account will form part of the deposit and will be returned to the tenant
at the end of the lease (subject to the landlord having no claim). The
landlord
will be entitled to draw against the deposit account in the event of there
being a default on the part of the tenant under the terms of the lease. If
this happens the tenant would then be obliged to reinstate the deposit account
to the full amount.
We provide different
versions of the deposit deed depending on whether the lease which it relates
to is assignable - if it is then the landlord would want the ability to withhold
returning the deposit to the tenant until the new tenant (the assignee) has signed up to a similar
document.
We also provide different
versions depending on whether the deposit is to be a fixed amount or an amount
linked to the amount of the rent. For example it can be phrased as being an
amount equivalent to say six months rent from time to time - then if there is
a rent review and the rent goes up then so would the amount of the deposit.
One formality that
you must observe where the tenant is a limited company is that you have to
register the rent deposit deed with
Companies
House within 21 days. To do this you fill in Companies Form MG01 which can
be downloaded for free from Companies House. You then have to send this along
with the Rent Deposit Deed and a cheque for £13 to Companies House (the
address is included in the form). They will note this against the company and then
return it to you. This formality only applies where the tenant is a company as
opposed to an individual.
| Rent Deposit Deed suitable for use where the lease is
assignable and the deposit is a fixed sum |
£20
|
|
| Rent Deposit Deed suitable for use where the lease is not
assignable and the deposit is a fixed sum |
£20 |
|
| Rent Deposit Deed suitable for use where the lease is
assignable and the deposit is a sum linked to a proportion of the annual
rent |
£20 |
|
| Rent Deposit Deed suitable for use where the lease is not
assignable and the deposit is a sum linked to a proportion of the annual
rent |
£20 |
|
Third
Party Guarantee
Generally speaking when a lease is granted provisions about
a guarantor are included as part of the wording of the document if that is
what has been agreed. If during the course of the lease it is assigned then it
may be at that point that a guarantee is sought dependant on the financial
strength of the ingoing tenant. This may take the form of either an Authorised
Guarantee Agreement given by the outgoing tenant and/or a separate guarantee from
some third party - in this case the third party would normally join in the
Licence to Assign. For further information about a Licence to Assign please click
here
| Licence to Assign Lease including guarantee provisions |
£25 |
|
| Authorised Guarantee Agreement |
£25 |
|
The
documents downloaded from this web site will be in the form of a Zip file. Once downloaded it will unzip to a Word
document. You will need a zip utility to unzip the document - Windows XP
contains a built in utility. Alternatively shareware versions suitable for
unzipping a file can be obtained from the Internet - for example, click the Winzip
button at the side of this page.
The
documents available on this site have been prepared for use in England &
Wales. They may not be valid if used in other areas.
