Introduction

Warranties are a key feature of any share purchase agreement (SPA). They are statements of fact made by the seller about various aspects of the company being sold. These warranties provide the buyer with protection, ensuring that the company they are acquiring is in the state represented by the seller. If any warranty is later found to be untrue, the buyer may have the right to claim damages.

This guide outlines the main types of warranties typically included in an SPA and explains their significance.

________________________________________

1. Title Warranties

These warranties ensure that the seller has full ownership of the shares being sold and that the shares are free from any encumbrances or third-party claims. They are crucial as they confirm that the seller has the legal right to sell the shares, and the buyer will acquire full ownership of the company.

Typical clauses include:

• The seller is the legal owner of the shares.

• The shares are free from any liens, charges, or other third-party interests.

• The seller has the power and authority to sell the shares.

________________________________________

2. Accounts Warranties

Accounts warranties provide assurances regarding the financial position of the company as represented in its financial statements. These warranties typically cover the accuracy of the company’s balance sheet, profit and loss account, and cash flow statement. The warranties ensure that the accounts present a true and fair view of the company's financial position.

Key examples include:

• The accounts have been prepared in accordance with applicable accounting standards.

• The accounts give a true and fair view of the company’s financial affairs.

• There are no undisclosed liabilities.

________________________________________

3. Tax Warranties

Tax warranties cover the company’s tax affairs, ensuring that the company has paid all taxes due and has complied with relevant tax laws. They protect the buyer from hidden tax liabilities that could emerge after the purchase.

Examples of common tax warranties:

• All taxes due have been paid, and there are no outstanding tax liabilities.

• The company has made all necessary tax filings and returns.

• There are no ongoing tax disputes or investigations by tax authorities.

________________________________________

4. Litigation and Dispute Warranties

Litigation warranties protect the buyer by confirming that there are no current or pending legal disputes involving the company. These warranties ensure that the buyer is not unknowingly acquiring a company facing costly or reputationally damaging litigation.

Key clauses include:

• The company is not involved in any ongoing legal disputes.

• There are no claims or proceedings threatened or pending against the company.

• The company is not in breach of any laws or regulations.

________________________________________

5. Commercial Contracts Warranties

These warranties provide assurances that the company's commercial contracts with customers, suppliers, and other third parties are valid and enforceable. They also confirm that no material contracts are at risk of being terminated due to the share sale.

Typical warranties in this area might include:

• All material contracts are in full force and effect.

• The company is not in breach of any major contracts.

• No customer or supplier has indicated an intention to terminate or materially alter their contract with the company.

________________________________________

6. Employment Warranties

Employment warranties provide assurance regarding the company’s workforce, confirming that the company complies with employment laws and has no disputes with its employees. This is especially important if the business has a large workforce or key employees critical to the company’s success.

Key employment warranties may include:

• All employees are employed on legally compliant terms.

• There are no ongoing or pending employment disputes.

• The company has met all obligations concerning pensions, redundancy payments, and other employee benefits.

________________________________________

7. Intellectual Property (IP) Warranties

These warranties address the ownership and protection of the company’s intellectual property, which may be vital for companies reliant on trademarks, patents, software, or other proprietary rights. IP warranties are designed to ensure the buyer will continue to benefit from the company's IP assets after the purchase.

Examples of IP warranties include:

• The company owns or has valid licences for all necessary intellectual property.

• No IP rights of the company are being infringed, and no third parties are infringing the company’s IP rights.

• The company is not involved in any IP disputes or claims.

________________________________________

8. Property Warranties

If the company owns or leases real property, property warranties ensure that the company has valid title or leasehold rights over its properties. These warranties also confirm that the properties comply with planning regulations, building codes, and other legal requirements.

Examples of property warranties include:

• The company owns or leases the properties identified in the agreement.

• There are no disputes regarding the company’s ownership or occupation of the properties.

• All properties comply with applicable building regulations and have the necessary planning permissions.

________________________________________

9. Environmental Warranties

These warranties provide protection against environmental liabilities, such as pollution or non-compliance with environmental laws. Environmental risks can be particularly significant in industries like manufacturing or real estate, and the buyer will want to ensure there are no hidden risks that could lead to fines or remediation costs.

Typical environmental warranties include:

• The company complies with all relevant environmental laws and regulations.

• The company holds all necessary environmental permits.

• There are no known environmental issues, such as contamination, that could give rise to liability.

________________________________________

10. Compliance Warranties

Compliance warranties confirm that the company has adhered to all applicable laws and regulations, including data protection laws, anti-corruption laws, and competition laws. These warranties protect the buyer from acquiring a company that is in breach of critical legal obligations.

Examples include:

• The company has complied with all applicable laws and regulations.

• The company has not engaged in any unlawful or unethical practices.

• The company holds all necessary licences and permits for its operations.

________________________________________

Conclusion

Warranties play a vital role in protecting the buyer in a share purchase transaction, offering recourse if the company's condition is not as represented. While this guide covers the main types of warranties typically found in an SPA, each transaction is unique, and warranties can be tailored to the specific circumstances of the deal. Sellers should be aware that giving warranties can expose them to liability, while buyers should ensure that warranties are comprehensive enough to cover all key risks.

The Landlord and Tenant Act 1954 plays a pivotal role in commercial property law in England and Wales, especially when it comes to the security of tenure for business tenants. For businesses occupying commercial premises, the concept of "security of tenure" provides stability, allowing them to remain in their premises beyond the expiration of their lease, provided certain conditions are met. This article breaks down the key provisions of the Act and what they mean for both landlords and tenants.

What is Security of Tenure?

Security of tenure refers to the right of tenants using a property for business purposes to continue their occupation even after the lease term has expired. This right is enshrined in the Landlord and Tenant Act 1954 and is designed to give tenants continuity in their business operations. While the Act offers significant protection to tenants, it also sets out specific grounds upon which a landlord can oppose the renewal of the lease.

The security of tenure provision is vital for businesses as it allows them to negotiate the terms of a new lease instead of vacating the premises at the end of their current tenancy. For landlords, this can be seen as a limitation, as they cannot simply take back their property when a lease ends unless they have legitimate reasons.

Key Provisions of the Act

The Act, specifically Part I, deals with business tenancies, and under Section 24, business leases do not automatically end when the agreed term expires. Instead, tenants have the right to renew unless certain steps are taken by the landlord or tenant to terminate the lease.

Lease Continuation

The business tenancy continues until either party serves a statutory notice under the Act. The landlord may issue a Section 25 notice either offering a new lease or opposing the renewal based on specific grounds, while the tenant can serve a Section 26 notice requesting a new lease.

Grounds for Opposition

A landlord can oppose a lease renewal only on limited grounds, as specified in Section 30 of the Act. These include the tenant’s failure to meet their obligations under the lease, such as delayed rent payments or failure to carry out repairs. The landlord may also oppose renewal if they intend to redevelop the property or use it for their purposes.

Lease Renewal Process

If the landlord and tenant cannot agree on the terms of a new lease, the matter can be referred to the court. The court will assess factors such as comparable market leases and the specific circumstances of the parties involved to determine fair terms for the lease renew

The Impact on Landlords and Tenants

For tenants, security of tenure offers protection from displacement, allowing them to plan for the long term and make investments in the premises. This is particularly important for small and medium-sized businesses that may be more vulnerable in a competitive commercial property market. Without the right to renew a lease, a business could be forced to relocate, disrupting operations and potentially losing customers.

For landlords, the Act can be more restrictive. While it ensures a stable relationship with the tenant, it limits the landlord’s ability to regain possession of the property for their own use or redevelopment without going through a formal process. The Act's provisions aim to strike a balance between giving tenants security and ensuring landlords can regain control of their property under justified circumstances.

Opting Out of Security of Tenure

One of the most flexible elements of the Act is the ability for landlords and tenants to agree to "contract out" of the security of tenure provisions. This option can be appealing in situations where both parties prefer not to be bound by the automatic right to lease renewal, such as in short-term leases or when the landlord has redevelopment plans.

Procedure for Contracting Out

The contracting-out process is highly regulated to ensure that tenants fully understand the rights they are giving up. Before entering into a contracted-out lease, the landlord must issue a formal warning notice, and the tenant must sign a declaration acknowledging that they understand and accept the exclusion of security of tenure.

Implications

While contracting out gives the landlord more control over the property at the end of the lease, it also means tenants lose the right to remain in the property after the lease expires. For tenants, it may offer leverage in negotiating other favorable lease terms, such as reduced rent. However, businesses must carefully consider the long-term implications, as losing the automatic right to renew can affect their ability to remain in the premises.

The Importance of Legal Advice

Both landlords and tenants must approach the issue of security of tenure with careful consideration. Whether negotiating a lease renewal or deciding to contract out of the Act, it is crucial to seek professional legal advice to understand the full implications. For landlords, this may involve balancing their desire for control over the property with the benefits of a stable, long-term tenant. For tenants, understanding their rights under the Act is key to ensuring that they can continue operating their business without disruption.

Conclusion

The Landlord and Tenant Act 1954 remains a cornerstone of commercial property law, providing essential protections for business tenants through the security of tenure provisions. While these protections offer significant advantages to tenants, particularly in a competitive market, they also place restrictions on landlords' ability to regain possession of their property. The ability to contract out of these provisions offers flexibility but requires careful consideration and legal guidance to ensure both parties' interests are adequately protected.

Whether you are a landlord or a tenant, understanding the implications of the Landlord and Tenant Act 1954 is crucial in navigating the commercial leasing landscape in England and Wales. With the right advice, both parties can make informed decisions that support their business objectives.

This article aims to provide a clear overview of security of tenure under the Landlord and Tenant Act 1954, helping visitors to your website understand its significance and the importance of informed decision-making when entering into or renewing a commercial lease.



This article aims to provide a clear overview of security of tenure under the Landlord and Tenant Act 1954, helping visitors to your website understand its significance and the importance of informed decision-making when entering into or renewing a commercial lease.

When occupying or managing commercial property, one aspect that often arises is how to handle a tenant’s repairing obligations. This can be a complex matter, especially when negotiating a new lease or dealing with issues that arise during the course of a tenancy. In this article, we explore what it means for a tenant to undertake repairing obligations in a commercial lease and how landlords and tenants can protect their interests.

What Are Tenant’s Repairing Obligations?

Repairing obligations refer to the duties imposed on the tenant under the terms of the lease to maintain, repair, and, in some cases, replace parts of the leased premises. These obligations are typically set out in the lease agreement and can range from minor repairs to full restoration of the property. The scope of these obligations depends on the terms negotiated between the landlord and the tenant at the outset of the lease.

Repairing obligations are often linked to the nature and condition of the property at the start of the tenancy, and they can vary greatly depending on the type of property, its age, and the length of the lease.

Common Types of Repairing Obligations

Full Repairing and Insuring (FRI) Lease: This is a common arrangement in commercial property where the tenant is responsible for both repairing the property and insuring it. The tenant must maintain the property in a good state of repair, regardless of its condition at the start of the lease.

Internal Repairs Only: In some cases, the tenant’s repairing obligations are limited to the interior of the premises. The landlord retains responsibility for external repairs, such as the roof and structure.

Schedule of Condition: To limit liability, tenants may negotiate a schedule of condition at the start of the lease. This records the state of the property at the outset, ensuring the tenant is only responsible for keeping the premises in the condition it was in when the lease began.

Dilapidations and End of Lease Repairs

One of the most contentious issues that can arise in commercial leases is dilapidations, which refer to the tenant’s responsibility to repair or restore the property at the end of the lease term. If the tenant fails to comply with their repairing obligations, the landlord may issue a dilapidations claim, requiring the tenant to either carry out the repairs or compensate the landlord financially.

It is important for tenants to be aware of these obligations from the start of the lease and to budget for any repairs that may be necessary. Many disputes can be avoided by maintaining the property throughout the lease term, rather than waiting until the lease is coming to an end.

Protecting Yourself as a Tenant

Tenants should ensure they fully understand their repairing obligations before entering into a lease. Seeking legal advice is crucial, as the obligations can be wide-ranging and financially significant. Key steps for tenants include:

Negotiating a Schedule of Condition: If the property is not in pristine condition at the start of the lease, tenants should push for a schedule of condition. This will limit their repairing obligations to the condition of the property as recorded at the start of the lease.

Understanding the Costs: Tenants should factor in the cost of repairs into their overall business plan. A full repairing obligation can be expensive, particularly for older properties or properties with existing issues.

Regular Maintenance: Carrying out regular maintenance and repairs during the lease can reduce the financial burden at the end of the lease term. This also helps avoid disputes with the landlord regarding dilapidations.

Landlord’s Perspective

For landlords, ensuring the tenant is clear on their repairing obligations is essential. Landlords can protect their interests by:

Insisting on a Full Repairing Lease: This places the onus on the tenant to maintain the property throughout the lease term.

Conducting Regular Inspections: Periodic inspections during the lease term can ensure the tenant is complying with their obligations and prevent more significant issues from arising later.

Handling Dilapidations Sensitively: At the end of the lease, landlords should handle dilapidations claims with care, ensuring the claim is reasonable and supported by evidence. Negotiating an amicable settlement can be more cost-effective than pursuing a legal dispute.

Conclusion

Understanding and managing a tenant’s repairing obligations in a commercial lease is key to avoiding disputes and maintaining a good landlord-tenant relationship. Both parties should seek professional legal advice to ensure that the lease reflects their expectations and protects their interests. By taking a proactive approach, tenants an

The current design and management regulations are set out in the Constructions (Design and Management) Regulations 2015 (“CDM 2015”). These regulations have an impact on pretty much everyone involved in construction, development and redevelopment work in Great Britain. Even small and domestic projects are covered. The regulations place various duties and obligations on different parties within the construction project. An outline of the main features are as follows:

What does it mean to assign a lease? 

Assignment is the term used to describe the process where a tenant under a lease transfers the lease to someone else (called the “assignee”). When the assignment has taken place, the original tenant ceases to be a tenant under the lease and the assignee becomes the tenant. If you think of the lease as being something that is owned by a tenant, then the lease is effectively sold to a new tenant.

The new tenant then takes over all the rights, obligations and liabilities under the lease and is accountable to the landlord.

Can all leases be assigned?

The question of whether a lease can be assigned and on what conditions will be contained within the lease. In other words, the lease itself will say whether the lease is assignable and if it is, then what conditions must be met as part of the process. Some leases prohibit assignment altogether, others allow an assignment but only on strict conditions.

In most cases, one of the conditions is that the landlord has to give legally binding written consent to an assignment. Usually, the landlord will also want to have vetted the new tenant/assignee in advance and approve them as a condition of the assignment.