Just before it agreed terms on its new office, Millcroft Wealth Management’s legal adviser recommended that it should have the deal reviewed by an independent expert. The Tenant Advisory Group were recommended. The results demonstrated how TAG adds value to property transactions, even at a very late stage.
As an established private wealth manager, the founders of Millcroft Wealth Management know all about trust and due diligence. Afterall, it is what their clients value most about them as you can see this from the testimonials on their website (see millcroft.co.uk). So when it came to trusting that their new landlord was offering them a good deal, they decided to invest in some extra due diligence to make absolutely sure. What they discovered was that their Landlord and his agent did not necessarily have their best interests at heart.
To the untrained eye the proposed lease terms appeared reasonable. However, in reality they would have left Millcroft vulnerable to a variety of risks that could have proved expensive and potentially damaging to their business.
Regrettably, the vast majority of commercial tenants under estimate the significance of the heads of terms document. In our experience, unless such terms are sufficiently detailed, it can be very difficult for a lawyer to protect a tenant’s interests effectively. Once lawyers have been instructed, tenants quite naturally start to invest their time and money in the relocation process. For example, they might place orders for new furniture, I-T and telecoms equipment. This explains why as you move past the heads of terms stage, Landlords tend to become increasingly intransigent when it comes to negotiating the wording of key clauses within the draft lease. They know that the longer lease negotiations drag on for the less likely it is that the Tenant is going to abort the transaction. So, they stick to their guns. This undermines your lawyer’s ability to represent your best interests and forces you to accept terms that you really ought not to.
The shortcomings we found in the heads of terms proposed to Millcroft are typical of most situations we come across where a tenant has negotiated terms without professional representation from an adviser such as ourselves. The issues that were addressed included security of tenure, service charges, break option conditions, repairing covenants, re-instatement and dilapidations liability.
After some further negotiation between ourselves and the landlord’s agent, changes were made to the heads of terms and the lease contract was drafted allowing the transaction to progress to a satisfactory completion.
The feedback we had from the client demonstrates the value that we were able to add to the process.
‘Thank you Martyn for all your help and guidance which has been really appreciated.’ Paul Mills, Director, Millcroft Wealth Management Limited.
‘We would like to thank you for the time that you have spent in negotiating the heads of terms for Oxford Court...we now feel that we can confidently progress matters.’ Adele Ravenscroft, Director, Millcroft Wealth Management Limited.