Leases can often take a substantial period of time – and several rounds of amendments – before the solicitors representing the landlord and the tenant can agree on a final version. Some of the amendments will depend on the facts of the particular transaction, but many other amendments are routine.
Here we consider a newly published standardised lease – the Scottish Model Commercial Lease - which aims to cut back on these more routine amendments, and speed up the letting process for both landlord and tenant.
The approach south of the Border
The Model Commercial Lease (MCL) suite of commercial leases was originally commissioned by the British Property Federation and introduced in England in 2014 by a working group made up of a large number of well-known English law firms, clients and trade organisations.
The intention at the time was to produce an industry standard lease that could be used as a fair starting point for most routine commercial lettings whilst at the same time attaining institutional acceptance. This aim could be achieved by avoiding unnecessary negotiation of routine content and effectively dispensing with most of the amendments which the parties' solicitors would have had to make otherwise. In turn, this would allow the parties to focus on the practical and commercial issues of real concern.
Almost three years on, the MCL in England has been well received by solicitors acting for both landlords and tenants.
Where it has been used in transactions, there has been a noticeable drop in the number of amendments. This has been marked by a change in culture amongst solicitors dealing with lease amendments. Traditionally, solicitors acting for each party would start with an opening gambit, applying drafting which would reflect their clients' best possible position, before subsequently conceding a fall-back position. The advent of the MCL has led to the disappearance of much of this initial negotiation.
Taking the MCL to Scotland
Having monitored the increasing popularity in England and Wales of the MCL, the Scottish Property Standardisation Group has recently introduced a Scottish version of one of the leases within the suite of MCL documents, namely the lease of part of a larger office building. The Group chose to start with this document because some of its content (for example service charge) lends itself to wider application in other forms of lease.
An important caveat here is that England has a large body of property legislation on the statute books, which avoids the need for many lease amendments. By contrast, such amendments are required in Scotland, where equivalent legislation does not exist.
Whilst it will take time for Scottish solicitors and their clients to adopt the MCL, at least in relation to multiple occupancy buildings, it is anticipated that a single occupancy version of the MCL will be introduced shortly which hopefully will be easier for landlords and their solicitors to embrace more quickly.
Even if not fully adopted, the MCL does allow routine clauses to be lifted for use in existing styles or to be used as a fall-back compromise position in negotiations. Agreeing a lease in terms both parties are happy with in as timely a manner as possible must be in both parties' interests, and hopefully the introduction of the Scottish MCL, once adopted by landlords and their solicitors, will over time speed up the letting process in Scotland.
Get in touch
If you would like to speak to Harper Macleod's Real Estate team about this or any other commercial property issue, we would be delighted to help.