Scots standard commercial leases now available

Over the years, the Property Standardisation Group has frequently been asked to produce a standardised form of commercial lease.

But producing a lease to reflect the PSG ethos of achieving a reasonably balanced starting point, that would be acceptable to both an institutional investor and the well advised tenant, seemed like too far a stretch, and other attempts to introduce a standard lease in the past had failed to gain traction.

The introduction in England & Wales of the Model Commercial Lease in 2014 changed that. A client-led project originally commissioned by the BPF, it consists of a comprehensive suite of leases, management documents and lease clauses.

With the MCL’s growing popularity south of the border, and with a shared vision of the benefits of standardisation, the PSG agreed to produce Scottish versions. The bulk of these – for offices and retail premises – have now been “kilted”, and are available on the PSG website.

The group’s approach when kilting externally produced documents is not to innovate on the content, but to make only those changes necessary to reflect differences in law. For the MCL, this has included:

• displacing the common law that the subjects are reasonably fit for the purpose for which they are let;
• displacing the landlord's common law repairing obligations;
• dealing with irritancy;
• providing that rei interitus does not apply;
• granting landlord's warrandice; and
• dealing with Scottish-specific legislation such as the Assessment of Energy Performance of Non-domestic Buildings (Scotland) Regulations 2016.

In an innovative approach, the leases provide that consent is always subject to reasonableness, unless the lease states otherwise, which contrasts with the opposite “default” position to which we are more accustomed, and that the landlord must act reasonably, unless the lease provides for absolute discretion.

The documents, which are drafted in plain language, are accompanied by guidance notes. The leases themselves contain detailed footnotes, to assist with drafting, and to bring important issues to the user’s attention. The leases lend themselves to customisation, and they include a number of optional provisions like a break clause; subletting terms, if permitted; and sustainability provisions.

The benefits of using standardised documents are increasingly appreciated, recognising the importance of getting the deal done quickly and efficiently for our clients. The standardised lease has the potential to get the parties as much as 80% of the way to the end product. That is good news for everyone.