How far can a commercial tenant alter a property? That depends on if it is classed as a fixture or a chattel? A recent case has highlighted the need to ensure a distinction between alterations which are tenant’s fixtures and alterations which are tenant’s chattels.
The case involved partitioning which was installed by the tenant during initial fit out works in accordance with a licence to alter. Both the lease and the licence to alter required the Landlord to give notice of any reinstatement the Landlord reasonably required before the end of the term. The tenant exercised a break option with 2 pre-conditions: 6 months’ prior written notice and vacant possession.
The Landlord did not serve a notice of his requirement to reinstate the premises. The case turned upon whether the partitioning alteration was a fixture and therefore formed part of the premises.
The partitioning was not carried out in accordance with the specification attached to the licence to alter and therefore the partitioning was in breach of the licence. The validity of the licence was conditional upon compliance with the condition on which the licence was given. As the conditions were not met, the partitioning became unauthorised works and therefore should have been removed automatically by the tenant. This meant that even if the partitioning was not a tenant chattel, the tenant should have removed it and failure to do so meant vacant possession had not been given.
Based upon expert evidence it was found that the partitioning was demountable and therefore the tenant did not in fact give vacant possession.
On sending or receiving a break notice, parties to the lease should review the lease and all supplemental documents (including licences to alter) carefully.
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The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter. This article is based on the law as at November 2016.