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The "Allied Dunbar v Homebase"case and its impact on flexible leases

By: Series: Journal of Retail and Leisure Property ; 3(1) 2003, 9-20(12)Publication details: 2003Subject(s): Summary: One of the most contentious clauses in commercial leases has long been that relating to sublettings. Landlords in their negotiations could end up in a direct relationship with their subtenants, with a lease less favourable than the headlease that could be perpetuated on a renewal, and a lower rent which could also be used as a comparable on review under the headlease. Tenants could in a depressed market be unable to sublet at all. Tenants giving in to landlords' demands at times when rents were thought never to go down, dealt with the adverse situation by side deeds with the subtenant to reflect the true terms of the deal, whereas the underlease followed the specific requirements of the headlease. Following the decision in "Homebase Ltd and another v Allied Dunbar Assurance plc" ([2002] EWCA Civil 666, Abs65740), landlords will be alert to asking specifically whether there will be a side arrangement but all parties will be aware that this will not get round the terms of the headlease. References. [Taken from journal abstract].
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Journal article London Journal article ABS66910 (Browse shelf(Opens below)) 1 Available 123086-1001

One of the most contentious clauses in commercial leases has long been that relating to sublettings. Landlords in their negotiations could end up in a direct relationship with their subtenants, with a lease less favourable than the headlease that could be perpetuated on a renewal, and a lower rent which could also be used as a comparable on review under the headlease. Tenants could in a depressed market be unable to sublet at all. Tenants giving in to landlords' demands at times when rents were thought never to go down, dealt with the adverse situation by side deeds with the subtenant to reflect the true terms of the deal, whereas the underlease followed the specific requirements of the headlease. Following the decision in "Homebase Ltd and another v Allied Dunbar Assurance plc" ([2002] EWCA Civil 666, Abs65740), landlords will be alert to asking specifically whether there will be a side arrangement but all parties will be aware that this will not get round the terms of the headlease. References. [Taken from journal abstract].