Knowing your obligations! – Getting your Lender’s Consent
Commercial Landlords need to be aware of the terms of their existing mortgage agreement before granting a lease/tenancy to a new (or existing) tenant.
The terms and conditions of your mortgage usually require consent from the lender before any lease can be granted. Failure to obtain consent will leave you in breach of the terms of your mortgage and the consequences can be extremely expensive for both the landlord and in certain circumstances the tenant.
The existence of a mortgage should be apparent from the landlord’s registered title and/or the companies register. However, these entries will not always reveal whether consent to lease is required and therefore further enquiry may be needed
When acting for either the landlord or tenant consent needs to be addressed quickly and efficiently to avoid any extra costs and/or a delayed transaction.
Recent guidance by the courts has assisted landlords by holding that, a lender when deciding whether or not to grant consent pursuant to the terms of the mortgage, has an implied obligation not to withhold consent unreasonably.
Best practice is to review the terms of your mortgage and apply for consent early. We at Guest Walker & Co will deal with this for you to avoid any last minute problems when it comes to completion of this important transaction.