Underlease of whole (office)

Last updated: 000000 2008

DATED______200[ ]

Sample Property PSL Precedent
WARNING: This document is a sample Property PSL precedent underlease of the whole of office premises. It is not the final version of the document that appears on the Property PSL website. The final version includes up-to-date EPC provisions for leases, and further updating and drafting modifications. It is provide as a sample only, and should not therefore be used in a transaction.

(1)

(2)

[(3)

______

UNDERLEASE

of property known as

[]

______

PRESCRIBED CLAUSES

LR1. Date of lease
LR2. Title number(s) / LR2.1 Landlord’s title number(s)
LR2.2 Other title numbers
LR3. Parties to this lease / Landlord
[]
(Co. Reg. No. []) whose registered office is at [ ]
Tenant
[]
(Co. Reg. No. []) whose registered office is at [ ]
[Guarantor
[]
(Co. Reg. No. []) whose registered office is at [ ]]
LR4. Property / In the case of a conflict between this clause and the remainder of this lease then, for the purposes of registration, this clause shall prevail.
The property known as [ ] [which property is more fully described in Schedule 1].
LR5. Prescribed statements etc. / LR5.1 Statements prescribed under rules 179 (dispositions in favour of a charity), 180 (dispositions by a charity) or 196 (leases under the Leasehold Reform, Housing and Urban Development Act 1993) of the Land Registration Rules 2003.
[You can delete 5.1 if it is not relevant]
LR5.2 This lease is made under, or by reference to, provisions of:
[Leasehold Reform Act 1967
Housing Act 1985
Housing Act 1988
Housing Act 1996]
[You can delete 5.2 if it is not relevant]
[None required for this Lease]
LR6. Term for which the Property is leased / The term is as follows:
[**] years from and including the [insert the first day of the term] 200[*].
LR7. Premium / [[ ](plus VAT of [ ]).]
LR8. Prohibitions or restrictions on disposing of this lease / This lease contains a provision that prohibits or restricts dispositions.
LR9. Rights of acquisition etc. / LR9.1 Tenant’s contractual rights to renew this lease, to acquire the reversion or another lease of the Property, or to acquire an interest in other land
[None] or[See clause [ ].]
LR9.2 Tenant’s covenant to (or offer to) surrender this lease
[None] or[See clause [ ].]
LR9.3 Landlord’s contractual rights to acquire this lease
[None] or[See clause [ ].]
LR10. Restrictive covenants given in this lease by the Landlord in respect of land other than the Property / [None] or[See clause [ ].]
LR11. Easements / LR11.1 Easements granted by this lease for the benefit of the Property
The easements and rights set out in Schedule 2.
LR11.2 Easements granted or reserved by this lease over the Property for the benefit of other property
The easements and rights set out in Schedule 3.
LR12. Estate rentcharge burdening the Property / None
LR13. Application for standard form of restriction / [Not applicable]
LR14. Declaration of trust where there is more than one person comprising the Tenant / [Not applicable]

1.DEFINITIONS

In this lease,unless the context otherwise requires, the following terms and expressions have the following meanings:

Authorised Person / anyone deriving title from the Tenant, and anyone at the Property with the express or implied authority of the Tenant, or of such person so deriving title;
Authority / any statutory, public, local, or other authority, and any court of law and any government department;
Base Rate / the base lending rate from time to time of the Royal Bank of Scotland plc or such other bank as the Landlord may nominate (or, if at any time during the Term base lending rate is abolished or no longer published, or cannot reasonably be ascertained, then such other comparable rate reasonably specified by the Landlord);
Basic Rent / [ (£ )] per annum [Insert amount of annual rent initially reserved] [subject to the provisions for review of rent contained in this lease;]
Conduits / sewers, drains, pipes, wires, cables, ducts, gutters, optic fibres, channels, culverts and any other medium for the passage or transmission of soil, waste, water, gas, electricity,air,smoke,light,telecommunications and any other information, together with radiators, tanks and cisterns and all other ancillary fixings equipment and structures;
Expert / has the meaning set out in clause [9.2];
Guarantor / the person described in clause LR3 as the Guarantor (including, if it is an individual, its personal representatives) and also any person who may at any time guarantee the performance and observance of the Tenant’s obligations in this lease;
Insurance Rent / the monies payable by the Tenant under clause [7.2];
Insured Risks / the risks against which the Superior Landlord has insured the Property under the terms of the Superior Lease and such other risks against which the Property may from time to time be insured by the Landlord (subject to any excesses exclusions limitations or conditions as may be imposed by the insurers or underwriters with whom such insurance is placed);
Interest / interest at 4% above Base Rate calculated on a daily basis during the period beginning on the first day on which the relevant sum is due and ending on the date on which the payment is made, whether before or after any judgment, and compounded on the usual quarter days;
Landlord / the person described in clause LR3 as the Landlord which expression includes the person or persons from time to time entitled to the reversion immediately expectant upon the determination of the Term;
Legal Obligation / any obligation (whether to do or refrain from doing something) relating to the Property, or its occupation or use, or for the benefit of employees or visitors, which is imposed by any present or future statute or any statutory instrument, regulation or order made under it or by any EU Directive or by any Authority;
Permitted Use / the use of the Property as offices for [] [or any use falling within Class [B1] of the Schedule to the Town and Country Planning (Use Classes) Order 1987] [which has been first approved in writing by the Landlord (such approval not to be unreasonably withheld or delayed);]
Planning Acts / the Town and Country Planning Act 1990; the Planning (Listed Buildings and Conservation Areas) Act 1990; the Planning (Hazardous Substances) Act 1990; the Planning (Consequential Provisions) Act 1990; the Planning and Compensation Act 1991; the Planning and Compulsory Purchase Act 2004 and any other Act of Parliament containing provisions relating to town and country planning in force at any time during the Term;
Plant / any plant, equipment or machinery from time to time in or serving the Property including without limitation any lifts, hoists, generators, boilers, and also equipment for air-conditioning, ventilation, heating, cooling, fire safety, communication, and security;
Prescribed Clauses / clauses LR1 to LR14 [LR12] appearing at the front of this lease;
Property / the property which is briefly described in clause LR4 and more fully described in schedule 1;
Rent Commencement Date / [Insert the rent commencement date];
Review Date / [Insert the first rent review date] and each [fifth] anniversary of that date;
Superior Landlord / any person who at any time has title to the Property in reversion mediately or immediately expectant upon the termination of the title of the Landlord;
[Superior Lease / a lease of the Property dated [ ] and made between [ ](1) and [ ](2);]
Tenant / the person described in clause LR3 as the Tenant which expression includes its successors in title and assigns in whom this Lease is for the time being vested;
Term / the contractual term granted by this lease together with any extension, holding-over or continuation of it;
VAT / Value Added Tax as defined in the Value Added Tax Act 1994, or other substituted tax of a similar nature;
the 1925 Act
/ the Law of Property Act 1925;
the 1954 Act / the Landlord and Tenant Act 1954;
the 1995 Act / the Landlord and Tenant (Covenants) Act 1995;
the 2002 Act / the Land Registration Act 2002;
[the 2003 Order] / [the Regulatory Reform (Business Tenancies) (England and Wales) Order 2003.]

2.INTERPRETATION

2.1General interpretation

In this lease:

2.1.1covenants and obligations expressed to be made or assumed by a party comprising more than one person are made and are to be construed as made by all such persons jointly and severally;

2.1.2covenants and obligations made or assumed by any party are binding on and enforceable against his or her personal representatives;

2.1.3references to this lease include any licence, variation, addition, qualification or supplemental document relating to it made between the Landlord and the Tenant (whether or not any person who is a Guarantor is a party to it);

2.1.4words denoting one gender include the other genders, and words denoting persons include firms and corporations and vice versa, and any reference to a company includes a limited liability partnership or other body corporate;

2.1.5words importing the singular number include the plural and vice versa;

2.1.6any obligation of the Tenant not to do, or omit to do anything includes an obligation not to allow that thing to be done or omitted to be done by an Authorised Person, and (unless the context otherwise requires) in any reference in this lease to an act, omission or default of the Tenant, the reference to the Tenant is to be construed as incorporating reference to any Authorised Person;

2.1.7except for any reference to the Town and Country Planning (Use Classes) Order 1987 (which is taken to mean that Order as it is enacted at the date of this lease), a reference to a statute or a statutory instrument includes any statute or statutory instrument amending, consolidating or replacing them respectively from time to time in force, and a reference to a statute includes statutory instruments and regulations made pursuant to it;

2.1.8references to the determination of the Term include the ending of the tenancy created by this lease whether before, on, or after the expiry of the contractual term of it.

2.2Clauses, references, contents and headings

2.2.1The Prescribed Clauses are included in and form part of this lease.

2.2.2Except to the extent provided in clause LR4, where there is an inconsistency between a provision contained in the Prescribed Clauses and a provision contained in the rest of the lease, the latter provision is to prevail over the former.

2.2.3The clause, paragraph and schedule headings are not to be taken into account in the construction and interpretation of this lease.

2.2.4Any reference in this lease to a page, clause, or schedule (and to a paragraph within a schedule) which is not otherwise attributed is to be taken as a reference to a page, clause, or schedule (or paragraph within a schedule) of this lease.

2.3Rights of entry

2.3.1References to any right of the Landlord to have access to the Property is to be construed as extending to any mortgagee of the Landlord and any Superior Landlord and to all persons authorised by the Landlord and any mortgagee of the Landlord and any Superior Landlord (including agents professional advisers contractors workmen and others).

2.3.2Rights to enter the Property are (unless otherwise specified) to be exercised at reasonable times and after reasonable notice, but extend (if justified by the circumstances) to entry after a shorter period of notice or to entry without notice.

2.3.3Any person exercising rights of entry conferred or reserved in this lease is to cause as little damage to the Property and as little inconvenience as possible and must make good any damage caused to the Property, but the Landlord will not be liable to the Tenant for any loss damage or claim arising from noise, dust, vibration, noxious fumes, odours, loss of trade, nuisance, or annoyance caused to the Tenant or to any other person in connection with the exercise of those rights.

2.4Indemnities

Indemnities given by the Tenant are to be construed as obligations to keep the Landlord or other specified persons indemnified against all losses, damages, costs, expenses, penalties, demands, claims, proceedings and liability of any kind (including all consequential fees, expenditure and VAT) arising as a result of the relevant act omission or default of the Tenant or an Authorised Person.

2.5Severance

If any provision of this lease is held to be invalid or unenforceable then such provision is (so far as invalid or unenforceable) to be given no effect and is deemed not to be included in this lease but without invalidating any of the remaining provisions of this lease.

3.DEMISE

The Landlorddemises the Property to the Tenant for the term specified in clause LR6, together with the rights set out in schedule 2 [and together also with the benefit of the rights granted by the Superior Lease], but except and reserving as set out in schedule 3 [and except and reserving also the rights excepted and reserved by the Superior Lease], and subject to all rights easements quasi-easements restrictive covenants and liabilities affecting the Property including (but not limited to) those mentioned in schedule 4, the Tenant paying to the Landlord as rent throughout the Term (and proportionately for any part of a year):

3.1the Basic Rent by equal quarterly instalments in advance on the usual quarter days the first instalment or a proportion (calculated on a daily basis) in respect of the period beginning on the Rent Commencement Date and ending on the day immediately preceding the next quarter day to be paid [on or before the execution of this lease] OR [on the Rent Commencement Date];

3.2the Insurance Rent by annual instalments in advance on demand [the first instalment or a proportion (calculated on a daily basis) in respect of the period beginning on the Rent Commencement Date and ending on the day before the next policy renewal dateto be paid [on or before the execution of this lease] OR [on the Rent Commencement Date];

3.3all VAT payable by the Tenant under this lease; and

3.4all Interest payable by the Tenant under this lease;and

3.5all other sums due from the Tenant to the Landlord at any time.

4.TENANT'S COVENANTS

The Tenant covenants with the Landlord to comply with the following provisions throughout the Term:

4.1Rents

To pay to the Landlord:

4.1.1the Basic Rent, without any deduction or set-off, at the times and in the manner stated and (if required by the Landlord at any time) to make any or all of such payments by bankers’ standing order or direct debit;

4.1.2the Insurance Rent;

4.1.3all VAT which is chargeable upon every VAT supply made by the Landlord to the Tenant under this lease; and

4.1.4on demand Interest which accrues in respect of any sums due (whether or not lawfully demanded) from the Tenant to the Landlord under this lease which remain unpaid for more than seven days after becoming due, and the Tenant will remain liable to pay such Interest notwithstanding that the Landlord may have refused to accept payment of such sums so as not to waive any breach of covenant.

4.2Outgoings

4.2.1To pay and indemnify the Landlord against all rates, taxes, charges, duties, assessments, impositions and outgoings of any sort which are payable at any time during the Term (whether by the owner or occupier of the Property) including charges and meter rents for electricity, gas, water, sewerage, telecommunications and other services rendered to or consumed on the Property, but excluding any tax assessed on the Landlord in respect of ownership of, or rental income from, or any dealing with reversionary interests in the Property.

4.2.2To indemnify the Landlord against any rates which become payable by the Landlord after the termination of the Term owing to the Landlord's inability to claim void rate relief for the maximum period (beginning immediately after the termination), where such void rate relief would have been allowed had the Property been occupied until the termination.

4.2.3If at any time the Propertyis not separately assessed for the payments and outgoings set out in this clause,to pay to the Landlord on demand a fair proportion (to be conclusively determined by the Landlord) of any assessment which includes the Property.

4.2.4Not without the consent of the Landlord (which is not to be unreasonably withheld or delayed) to agree with any Authority any rating or other assessment in respect of the Property and to consult with, and have due regard to the views of, the Landlord in all relevant negotiations.

4.2.5To pay to the Landlord on demand a fair and proper proportion (to be conclusively determined by the Landlord) of the expense of cleaning, lighting, repairing, renewing, decorating, maintaining and rebuilding any walls, fences, gutters, drains, roads, ways, pavements and paths used by the Property in common with the owners, occupiers or users of any other property.

4.3Repair and decoration

4.3.1To keep the Property in good and substantial repair and condition together with all improvements and additions to the Property and all Landlord's fixtures, fittings and appurtenances of whatever nature affixed or fastened to the Property (damage by the Insured Risks excepted, unless and to the extent that the policies of insurance in respect of the Insured Risks effected by the Landlord are vitiated or the policy monies are withheld by reason of any act, omission, neglect or default of the Tenant or an Authorised Person).

4.3.2To keep the Property painted or otherwise appropriately decorated and (where appropriate to any part for its preservation and protection) treated to a high standard, and, not less than once in every period of three years and also in last three months of the Term (howsoever determined)to redecorate or suitably treat the Property to a high standard and to the Landlord's specification.[i]