Heads of Terms for Licence to Underlet Part of Property
These Heads of Terms for Licence to Underlet Part of Property are designed to ensure that the landlord, tenant and undertenant agree all significant points of principle before the landlord issues a Licence to Underlet Part for signature.
If the proposed underletting is of the whole of the Tenant’s premises, rather than part, the Heads of Terms – Whole should be used instead.
Commercial leases tend to prohibit underletting without the Landlord’s consent. During the term of a lease, the Landlord may well receive a request from the Tenant for consent to grant an underlease. The Landlord’s consent is usually given by way of a formal Licence to Underlet.
Usually, the Landlord will be under a duty “not to unreasonably withhold or delay consent”. The Landlord must therefore deal promptly with the Tenant’s request for consent and must either agree that consent will be given or give reasonable grounds for refusing consent. If consent is to be given, the parties should use template to agree the Heads of Terms before the Landlord prepares the draft Licence to Underlet Part.
Not all leases allow underletting of part. If the lease contains an absolute prohibition on underletting part only of the premises the Landlord can refuse consent without having to give reasons. The Landlord should therefore check the terms of the lease carefully before agreeing any terms.
The template is suitable for any type of commercial property, including shops, restaurants, offices and industrial premises. It can be used in conjunction with the Licence to Underlet Part template. The Heads of Terms prompt the parties to record administrative information, such as their contact details and details of the lease, and to set out what has been agreed in relation to the underletting, including the underlease term, rent and other key points. A plan should be attached with the extent of the Underlet Premises clearly marked. The Heads of Terms also set out any fees to be paid by the Tenant in relation to the application for consent.
This document is in open format. Either enter the requisite details in the highlighted fields or adjust the wording to suit your purposes.
This template can also be found under Commercial Property Management: Underlettings.
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