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Real Estate
Tuesday 5th August 2014

Does your commercial lease have a “group sharing” clause? By James Goff of JPC Law

It is now usual in a commercial property lease for a tenant to ask for a ‘group sharing’ clause. It’s often the case that this may have already been accounted for in the heads of terms.

The intention of such a clause is to allow the tenant company to share occupation with other companies of the same group, without having to contact the landlord and request consent each time. Obviously, this saves both time, cost and inconvenience for the tenant in today’s fast moving workplace.

However, there are several considerations that the landlord may want to take into account either at the heads of terms stage or when the tenant’s solicitor requests this clause:

The first is whether to make this arrangement personal to the tenant, otherwise upon an assignment, the next tenant will also have the benefit of this clause.

In particular, the landlord will require some form of control over this relationship and the most important factor is to ensure that such group sharing does not create a relationship of landlord or tenant.

Furthermore, the landlord will want the sharing of such occupation to automatically come to an end when either the tenant company is no longer part of the group or when any of the occupying group companies cease to be members of that group.

In order to achieve this, the prudent landlord may also require to be kept up-to-date as to who is in “actual occupation” and therefore may request to be given notice when any group company is in actual occupation of the property and when such group occupation ceases at the property.

Finally, as with any alienation and underletting provisions, the landlord may also wish to put a limit on the number of group occupiers as well and a case of good property management.

If you have any questions regarding such clauses or need further advice please contact James Goff at JPC Law:

Email: JGoff@jpclaw.co.uk

Tel: 020 7644 7286


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