Template Agreement for Underlease of Commercial Premises

Agreement for Underlease (Conditional on Superior Landlord’s Consent)

PROP.MAN.72
This Agreement for Underlease (Conditional on Superior Landlord’s Consent) allows a Landlord and Tenant to agree that an Underlease of Commercial Property will be entered into once the Superior Landlord’s Consent to the grant of the Underlease has been obtained.

Most leases require the Tenant to obtain the Landlord’s consent before granting an Underlease. Consent is usually given by way of a formal Licence to Underlet entered into by the Superior Landlord, Landlord and Tenant.

The Landlord and Tenant cannot complete the grant of the Underlease until the Superior Landlord’s Consent has been obtained. If they wish to make a contractual commitment pending the grant of Consent, this Agreement for Underlease can be used.

We have other template Agreements for Lease for different scenarios including Unconditional, Conditional on Change of Use Consent and Agreement with Landlord’s Works.

The form of Underlease must be agreed and a copy of it attached to the Agreement before the Agreement is signed.

The Agreement refers to various dates. If the Superior Landlord’s Consent has not been obtained by the Longstop Date either party may terminate the Agreement (and the Underlease will not be granted). The Completion Date, when the Underlease is completed, is five working days after the grant of Consent.

Clause 1 contains provisions relating to the application for Consent, including the parties’ respective obligations and confirmation as to which party will bear the Superior Landlord’s costs.

Clause 2 contains the agreement to enter into the Underlease on the Completion Date, assuming that Superior Landlord’s Consent has been granted. The Agreement is personal to the Tenant (i.e. the benefit cannot be assigned to another person). If the Landlord sold the Property, the Agreement would be binding on the buyer (i.e. the buyer would have to grant the Underlease to the Tenant).

Clause 3 incorporates the Standard Commercial Property Conditions (Third Edition) in the Agreement. These Conditions are widely used in Commercial Property transactions (and are similar to the Standard Conditions of Sale used for residential conveyancing). A copy of the Standard Conditions is available from the Oyez legal stationers website. Unfortunately we are not able to supply the Standard Conditions.

Clause 4 deals with completion of the Underlease and sets out any payments the Tenant must make, for example the first instalment of rent.

Clause 5 covers exclusion of security of tenure. If the Underlease is to be granted without security of tenure, the exclusion procedure must be completed before the Agreement for Underlease is entered into. More information is available in the Guidance on Excluding Security of Tenure and the associated forms.

Clause 6 relates to VAT. It requires the Tenant to pay any VAT that is chargeable on the rent.

Clause 7 contains standard legal wording including a clause about notices.

The Agreement needs to be signed by each party at the end. The Landlord and Tenant may sign the same copy or one copy each.

Optional phrases / clauses are enclosed in square brackets. These should be read carefully and selected so as to be compatible with one another. Unused options should be removed from the document.

This Agreement for Underlease (Conditional on Superior Landlord’s Consent) is in open format. Either enter the requisite details in the highlighted fields or adjust the wording to suit your purposes.

Once you have purchased access to the appropriate document folder click on the “Download Document” button below. You will be asked what you want to do with the file. It is recommended that you save the document to a location of your choice prior to viewing.
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