In the intricate world of commercial property, disputes can occur often and, if not effectively resolved, landlords and tenants can become embroiled in lengthy legal battles, risking their investments and disrupting their business operations.
Commercial property disputes might relate to any type of commercial property, whether an industrial building, an office or retail space. These disputes are often complicated and involve complex areas of law, meaning they can be costly and time-consuming for all parties involved. Therefore, it is important to understand the legal options available for resolving them.
Here is some advice on how to avoid a commercial property dispute arising in the first place, and what to do in the event that conflict does occur.
Preventing a dispute arising
Commercial landlord and tenant disagreements can occur over many issues. Some of the most common include breach of a covenant [for example, a tenant subletting part of the premises without their landlord’s consent as prescribed for in the lease agreement], serious damage to the property, the tenant causing a nuisance, service charges, insurance cover, maintenance of the property and the procedure for serving Notices on tenants.
To limit the potential for a dispute to arise it is important that the lines of communication are kept open from the offset so that, should there be an issue between landlord and tenant, it can be resolved at an early stage before it becomes too advanced. You should always be open to reasonable solutions and compromise to avoid disputes escalating or becoming impossible to resolve.
It is also vital to pay close attention to the clauses included in the lease of a property. Commercial property leases should be professionally drafted and scrutinised carefully by both parties before signing. It should be clear and cover every eventuality so that everyone, tenants and landlords, know where they stand.
A written log of any relevant incidents or correspondence can also prove helpful to refer to later on.
What to do when conflict arises
There is no one best way to resolve a commercial property dispute, and how the matter is best resolved largely depends on the circumstances and the complexity of the matter. For example, the parties may be able to negotiate between themselves, resolving the issue without legal intervention.
Where matters cannot be resolved informally, there are various options for commercial property dispute resolution.
‘Mediation’ is a type of alternative dispute resolution, where the parties are joined by a qualified mediator who acts as a neutral third party. The mediator assists both to work toward a resolution, without imposing any decision, and always remaining unbiased.
Mediation can be particularly appropriate where the parties involved wish to protect an ongoing business relationship. Generally, this is because mediation processes can be more amicable compared to Court proceedings, focused on open communication, and finding resolutions that are mutually acceptable where possible.
Through mediation, the parties that are in dispute are each invited to communicate their case and viewpoint to the arbitrator. The arbitrator’s role is then to evaluate each side of the argument, review the evidence, and make an unbiased, legally binding decision.
If it is unlikely that the parties involved will be able to reach a resolution between themselves, arbitration, if available or agreed to between the parties, is likely to be more suitable. Often, arbitration can be preferable in comparison to litigation. It is a private and confidential process, whereas Court processes are not always fully confidential, and certain details may become public depending on the circumstances.
If the dispute cannot be resolved by informal negotiations, or some form of alternative dispute resolution, it will be necessary to escalate the case to litigation processes. As litigation is more costly and time consuming, this is generally a last resort for dispute resolution.
Where disputes escalate and cannot be solved outside of Court, litigation may be the only available option to resolve matters. Where exercising this option, it is unlikely that the business relationship will be preserved, however, it may be the only option available to settle a dispute.
Conclusion
Whether you are a landlord or a tenant, your commercial premises are important to you and your future. Commercial property disputes require swift resolution to prevent a damaging situation to both parties – including potential loss of revenue and impact on business operations.
Litigation in commercial property disputes can be lengthy, expensive and complicated, and it is vital to take legal advice sooner rather than later to keep costs down. By seeking early legal advice, you can minimise any potential fallout and resolve matters quickly and effectively.
Yulia Barnes is founder and managing partner of Barnes Law
