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Legal Framework
Property, in the context of buildings and land,
comes under the heading of 'real estate'. Real
estate is a legal term that encompasses land,
improvements to the land, such as buildings,
fences, wells and other site improvements that are
immovable and fixed in location.
The ownership of 'real property' in England and Wales is enshrined in common law, equity and statute. As a monarchy, ownership is based upon hierarchy. The 'Crown' has the right and duty to determine the legal owner of the land, and the duty is administered by Her Majesty's Land Registry, a government agency whose task is to keep title records. Property transactions are almost always in writing and the title deeds (records) include information about the owner, charges, restrictive covenants, and so on.
The ultimate title is the freehold, which is ownership for an indefinite period of time. Below the freeholder is the leaseholder. The leaseholder cannot grant an underlease lease for a longer period of time than the term of its own lease.
There is no practical distinction between landlord and owner, assuming the owner is also the landlord, or between tenants and occupiers, assuming the tenant is not the owner-occupier, but describing landlords as 'owners' and tenants as 'occupiers' reflects a desire amongst some to get away from feudalism. Similarly, it is open to discussion nowadays whether a landlord ought to be considered the more dominant, because many retailers regard landlords as their suppliers.
The shop property market comprises freehold and leasehold owner-occupiers, landlords and 'tenants'. (I've put 'tenants' because here I am using the term loosely to include licences. As I explain elsewhere, there are practical differences between tenancies and licences.). Where there are intermediate interests between freeholder and tenant, the in-between respective landlords would be defined as 'superior landlord' and landlord.
Frequently in leases, the landlord is described as 'lessor' or 'lessors' - the plural is sometimes used even though there may be only one party - and the tenant as 'lessee' or 'lessees'. Also, when the landlord is the officers of an administrative body, for example the "Mayor and Burgesses of..." the landlord could be described as the "council", and with railway leases, the landlord is often described as "the Board". Although for some aspects of a tenancy the correct description is necessary, for purpose of this section and unless otherwise stated, I shall stick to landlord and tenant.
The operation and enforcement of the legal relationship between landlord and tenant is subject to business tenancy law. Agricultural property law, which is in a field of its own (excuse the pun!) is, in some respects, arguably more progressive: for example tenant's improvements are not limited to physical alterations to the property, but include the intangible. Although residential property has its own law, there are some overlapping areas. For example, with a shop with a residential flat above and where the shop and flat are let on a business tenancy, the rental valuation of the flat is subject to business tenancy law.
Generally, a shop investment is a shop property that is let on a tenancy (or some other type of occupancy where rent or equivalent is paid). This may sound pedantic but, in my opinion, a vacant un-let property is not an investment until it is let. I think a distinction is useful because whilst a vacant shop would upon its letting be categorised as an investment, really there is no investment without a tenant.
The terms and conditions of a tenancy are embodied in a document, known as a 'lease'. Again, I use the terminology loosely, because the terms and conditions of a licence are also embodied in a document, but it would not be a lease. Moreover, calling such a document a licence does not make it one. I shall explain the difference elsewhere.
The relationship between landlord and tenant hinges upon the lease. A lease is a contract for a certain term and has a start date and expiry (end date). When a tenancy is for a business purpose, a lease is a commercial contract, and a commercial contract means the parties are in law deemed to know what they are doing.
I shall go into detail elsewhere but basically a lease contains terms and conditions for the operation, management and enforcement of the tenancy. The landlord and tenant, known as the parties, can agree whatever terms and conditions they like for the tenancy, but many requirements are governed by overriding legislation.
Because different landlords and different tenants have different requirements and shops, in common with all commercial properties, are different there is no standard form of lease in use generally. Whilst many landlords and tenants have their own standard wording and documentation - also the Law Society, for example, has a standard document used by landlords and tenants - you cannot buy a ready-made document and simply fill in the blanks and expect the tenant to sign without question, or at least not without changing some wording here and there. Normally, what happens is that after outline terms have been agreed between the parties and 'heads of terms' agreed, the lawyers for the respective parties, sometimes with the help of respective surveyors, draft and approve the documentation from scratch.
The onus is on the landlord's side to draft the document and on the tenant to approve. Because tenancies often last for years, and the wording of terms and conditions can be fashionable, the content of leases varies considerably. Also, although the terms and wording of a lease cannot be changed after completion, except by rectification or mutual agreement, leases are assets that can be bought, sold, transferred and mortgaged. During the life of a lease it is common for associated agreements to be entered into by the parties and/or their successors. Such agreements include deeds of variation, rent deposit deeds, licences to alter, change the use, assign, underlet, rent memoranda, and side-letters.
The ownership of 'real property' in England and Wales is enshrined in common law, equity and statute. As a monarchy, ownership is based upon hierarchy. The 'Crown' has the right and duty to determine the legal owner of the land, and the duty is administered by Her Majesty's Land Registry, a government agency whose task is to keep title records. Property transactions are almost always in writing and the title deeds (records) include information about the owner, charges, restrictive covenants, and so on.
The ultimate title is the freehold, which is ownership for an indefinite period of time. Below the freeholder is the leaseholder. The leaseholder cannot grant an underlease lease for a longer period of time than the term of its own lease.
There is no practical distinction between landlord and owner, assuming the owner is also the landlord, or between tenants and occupiers, assuming the tenant is not the owner-occupier, but describing landlords as 'owners' and tenants as 'occupiers' reflects a desire amongst some to get away from feudalism. Similarly, it is open to discussion nowadays whether a landlord ought to be considered the more dominant, because many retailers regard landlords as their suppliers.
The shop property market comprises freehold and leasehold owner-occupiers, landlords and 'tenants'. (I've put 'tenants' because here I am using the term loosely to include licences. As I explain elsewhere, there are practical differences between tenancies and licences.). Where there are intermediate interests between freeholder and tenant, the in-between respective landlords would be defined as 'superior landlord' and landlord.
Frequently in leases, the landlord is described as 'lessor' or 'lessors' - the plural is sometimes used even though there may be only one party - and the tenant as 'lessee' or 'lessees'. Also, when the landlord is the officers of an administrative body, for example the "Mayor and Burgesses of..." the landlord could be described as the "council", and with railway leases, the landlord is often described as "the Board". Although for some aspects of a tenancy the correct description is necessary, for purpose of this section and unless otherwise stated, I shall stick to landlord and tenant.
The operation and enforcement of the legal relationship between landlord and tenant is subject to business tenancy law. Agricultural property law, which is in a field of its own (excuse the pun!) is, in some respects, arguably more progressive: for example tenant's improvements are not limited to physical alterations to the property, but include the intangible. Although residential property has its own law, there are some overlapping areas. For example, with a shop with a residential flat above and where the shop and flat are let on a business tenancy, the rental valuation of the flat is subject to business tenancy law.
Generally, a shop investment is a shop property that is let on a tenancy (or some other type of occupancy where rent or equivalent is paid). This may sound pedantic but, in my opinion, a vacant un-let property is not an investment until it is let. I think a distinction is useful because whilst a vacant shop would upon its letting be categorised as an investment, really there is no investment without a tenant.
The terms and conditions of a tenancy are embodied in a document, known as a 'lease'. Again, I use the terminology loosely, because the terms and conditions of a licence are also embodied in a document, but it would not be a lease. Moreover, calling such a document a licence does not make it one. I shall explain the difference elsewhere.
The relationship between landlord and tenant hinges upon the lease. A lease is a contract for a certain term and has a start date and expiry (end date). When a tenancy is for a business purpose, a lease is a commercial contract, and a commercial contract means the parties are in law deemed to know what they are doing.
I shall go into detail elsewhere but basically a lease contains terms and conditions for the operation, management and enforcement of the tenancy. The landlord and tenant, known as the parties, can agree whatever terms and conditions they like for the tenancy, but many requirements are governed by overriding legislation.
Because different landlords and different tenants have different requirements and shops, in common with all commercial properties, are different there is no standard form of lease in use generally. Whilst many landlords and tenants have their own standard wording and documentation - also the Law Society, for example, has a standard document used by landlords and tenants - you cannot buy a ready-made document and simply fill in the blanks and expect the tenant to sign without question, or at least not without changing some wording here and there. Normally, what happens is that after outline terms have been agreed between the parties and 'heads of terms' agreed, the lawyers for the respective parties, sometimes with the help of respective surveyors, draft and approve the documentation from scratch.
The onus is on the landlord's side to draft the document and on the tenant to approve. Because tenancies often last for years, and the wording of terms and conditions can be fashionable, the content of leases varies considerably. Also, although the terms and wording of a lease cannot be changed after completion, except by rectification or mutual agreement, leases are assets that can be bought, sold, transferred and mortgaged. During the life of a lease it is common for associated agreements to be entered into by the parties and/or their successors. Such agreements include deeds of variation, rent deposit deeds, licences to alter, change the use, assign, underlet, rent memoranda, and side-letters.