Mike Storey, head of professional services at Brown&Co, St Neots, explains the importance of a formal commercial property agreement.

When an arrangement between landlord and tenant is clear and unambiguous, arguments are avoided and the relationship, which started on a cordial, friendly basis, can continue.

Let’s first explain a few definitions which are vital when embarking on a commercial property agreement – and demonstrate why doing it informally is not always a good idea.

The Hunts Post: Mike Storey, head of professional services at Brown&Co, St NeotsMike Storey, head of professional services at Brown&Co, St Neots (Image: Brown&Co)
Exclusive possession: The person you are entering into the agreement with has the key to the door/gate and can prevent anyone else from entering the premises without prior agreement. This is usually modified by terms within a formal contract and is one of the precursors to granting a lease or tenancy.

Demise: The area to be covered by the arrangement. This can be an office, a warehouse, a shop, an industrial unit, a place for leisure, a space for a charity to use, a field, a car park, or anything where a contract for the occupation of land is to be handed over.

Lease term: This is the duration the agreement/lease is to continue for. It can be a fixed period or can be variable based on, for example, the frequency with which the rent is paid. This latter arrangement is often referred to as a periodic tenancy.

The point of this is that ‘death and taxes’ are said to be the only two certainties in life, but I would add ‘change’ to that list.

Nothing ever stays the same. Circumstances change, friends and family members fall out, and if there is an informal commercial arrangement, it can prevent both sides moving forwards.

A formal agreement clearly sets out the terms of occupation and is why ‘good fences make good neighbours.’ You can contact Mike Storey at Brown&Co in St Neots on 01480 479071.