The following Construction guidance note provides comprehensive and up to date legal information covering:
Under an agreement for lease which contains development obligations, the tenant’s obligation to take the occupational lease only arises once the developer’s works have been completed and are fit to be taken over by the tenant. This will occur when the works are certified as being ‘practically complete’.
Practical completion under the building contract may have the same meaning as practical completion for the purposes of the agreement for lease, but there may be additional requirements for practical completion under the agreement for lease, as explained in this Practice Note.
Note that the term ‘completion’ will often be used under an agreement for lease and this should be distinguished from the term ‘practical completion’ of the construction works under a building contract which construction lawyers will be familiar with. Completion under an agreement for lease generally refers to completion of the lease itself. Completion of (or entering into) the lease may happen at a different time to practical completion of the construction works.
There is no standard industry definition of ‘practical completion’, although some construction contracts include a bespoke definition in order to create more certainty or to suit the particular project. For more information on practical completion in building contracts including relevant case law on the meaning of practical completion, see Practice Note: What is practical
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