Lease variations

While this Overview primarily concerns commercial property matters, it also touches on residential considerations.

Parties often wish to renegotiate the terms of an existing lease. Following completion of a lease, landlords and tenants are free to negotiate a variation to the lease terms (although generally the other party is under no obligation to negotiate or agree any variation).

The parties will usually enter into a deed of variation to expressly record any agreed variation to the original lease. If the change to lease terms is a personal or temporary concession, the parties may agree to enter into a side letter instead—see Practice Note: Side letters to leases and Precedent: Side letter modifying lease terms.

Key areas of risk relating to lease variations include:

1. •

   inadvertent surrender and regrant (by operation of law)

2. •

   release of guarantors (or former tenants that remain bound by tenant covenants) and other issues relating to guarantors

3. •

   failure to obtain necessary third-party consents (eg superior landlord, mortgagee)

4. •

   unintended consequences, including in relation to superior leases, underleases or tax, and

5. •

   failure to comply with registration requirements

For general guidance...