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What Security do you have with a Pub Co Tied Commercial Lease or a TAW with Domestic Accommodation?
The answer is very little, if you breach certain terms within your Commercial Lease.
The Domestic Accommodation may be rated as domestic, but in virtually all cases it falls within the clauses of a Commercial Lease.
With rented domestic accommodation and the tenant fails to pay the rent, it can take months to evict them, not so with Commercial Leases.
With Commercial Property, if you don’t pay the rent you can be evicted within a week, if the landlord has a very slick lawyer, which many large companies have.
We have had Lessees tell us they have stopped paying the rent to the Pub Co because certain works or stock has not been supplied, we always tell them pay the rent immediately, they have in most Commercial Leases the right to evict you very quickly, you may be able to stall on your wet stock being paid, these companies are Masters in legal debt collection and legal eviction.
If you have your family in the domestic accommodation they will all be evicted, perfectly legally, the eviction notice will state when you have to be out.
Commercial Leases were set up for businesses without domestic accommodation in the main and moving your family at a few days notice is not pleasant.
Tied Pubs were always Brewery Tenancies, until the Pub Co’s came on the scene with their Tied Commercial Leases.
There is usually no reference to the eviction from Domestic Accommodation in the lease, the eviction applies to the whole property as a Commercial entity.
If the same protection that is given to Domestic Accommodation on evicting tenants applied to Commercial Property with Domestic Accommodation, the Pub Co’s would not exist in their present form.
I had a meeting with the M.D. of one major Pub Co, at that time he said it cost them £30K every time a lessee was evicted.
Some years later I was talking to a Regional Manager from the same Pub Co and he said that they now clear up to £60K from an evicted lessee, I would like to think this was bravado, but he was probably right.
But they certainly set the leases up now so that a disgruntled lessee or one about to be evicted cannot sell the contents, even though they bought them and think they belong to them, whatever the circumstances the pub must be capable of trading effectively, in real terms, saleable as a going concern, read the small print in the lease.
Sadly, in our opinion lessees are an expendable element with Commercial Leases, the risk element is stacked in favour of the Landlord, their only concern is not having a lessee.
The major Pub Co’s pay for the best legal advice to find their way through the law and the Legislation, when required which would appear at the moment to be frequently.
Take a Tied Family Brewer Tenancy or buy a genuine Freehouse, Tied Commercial Leases are to be avoided in our opinion for the foreseeable future or until they comply with the New Legislation in it’s entirety, which is very unlikely at the moment.
The views expressed are not necessarily the editors and www.buyingapub.com accepts no responsibility for them, we do try to avoid offensive or litigious statements being made. They are written by concerned professionals in the industry who feel that these issues should be raised to ensure that all licensees are made fully aware of many hidden pitfalls.
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