Samantha Fenton
Solicitor
19 Oct, 2010

Do you read your contract carefully before signing it?

A restrictive covenant is something designed to restrict or control the usage of property, if you like it's a promise to do, or not do, a particular thing with a particular piece of land. Any commercial lease worth its salt will include a litany of restrictive covenants designed to protect the landlord and to ensure that the burden of maintaining the property falls squarely at the door of the tenant. So what can you do, as a tenant, to ensure that you don't end up paying out at the end of the lease for items and things that you could have avoided had the lease been amended more fairly in your favour?

The common types of restrictive covenant are those relating to repair and maintenance of the property, as an example:

• To paint the internal walls once every two years with a good quality paint, the colour of which should be agreed in writing beforehand with the landlord
• To the reasonable satisfaction of the Lessor's Surveyor well and substantially to repair re-build and keep in good condition and properly decorated inside and out the demised premises and every part thereof

From the tenant's perspective these covenants are really quite onerous, it means that once every two years you would have to go through the expense and upheaval of repainting the entire premises and you would have to first obtain the Landlord's consent to the colour and type of paint you would have to use. To have to "repair re-build and keep in good condition" the premises could mean that at the end of the lease you would have to give the property back to the Landlord in a "good condition" which again could mean spending out a substantial sum of money for which you would see no return or no value to your business.

Other restrictive covenants commonly seen in leases are those that prohibit the tenant from sub-leasing the premises, this can cause problems, particularly in cases where you may wish to hold the lease over the whole premises but only occupy part of it. You need to ensure that you check carefully as to whether you can then sub-let the part of the premises you are not using.

If you fail to comply with these covenants then you will be in breach of your lease and the Landlord may have the right to terminate your lease or levy charges against you.

It is crucially important therefore that you ensure that you understand the restrictive covenants that you are entering into and that you get good legal advice on the implications of signing your lease before you sign it.