Can commercial property leases or transfers be confidential?
A commercial lease is a form of legally binding contract made between a business tenant and a landlord.
At its simplest, the lease gives the tenant a legal interest in the property to use it for a business or commercial activity for a set period of time. In return for this, money is paid to the landlord in the form of rent.
The lease also outlines the rights and responsibilities of both the landlord and the tenant during the lease period and can include confidentiality clauses.
What information in leases may need to be confidential? Generally sensitive, commercial information such as rents or premiums paid.
Why have a confidentiality clause in a lease? This is usually driven by commercial factors such as parties’ negotiating positions.
Can it be added in to an existing lease? No, so confidentially issues need to be considered at the outset of a matter as part of agreeing terms and drafting documents.
Tom Weightman, associate in the commercial property team at Wake Smith looks at the issue.
More clients have been asking about whether leases or transfers can be confidential.
This is usually so rents or premiums paid are not public knowledge.
Generally leases which are longer than seven years are registrable with the Land Registry.
This means once they have been registered, they will become a document which can be accessed by the public.
It can be an issue where for example, prospective tenants negotiating new leases can obtain a former or neighbouring lease and can see what concessions (such as rent free periods or low premiums) have previously been agreed and could undermine the landlord’s or seller’s negotiating position.
If there are concerns on confidentiality the main ways around this are:
- Apply to the Land Registry for the relevant document to be treated as an exempt information document (EID).
This usually applies where there is particular information contained in the document which is commercially sensitive to the applicant. Granting EID status to a document is at the discretion of the Land Registry.
If the application is successful, the public would only be able to obtain an edited copy of the document with the prejudicial information hidden.
- Not to include the sensitive information in a document which needs to be registered with the Land Registry. For example a rent concession on a new lease could be documented in a side letter entered into between the parties.
- Leases granted for terms less than seven years do not need to be registered with the Land Registry.
For further advice on all commercial property matters contact Tom Weightman at Wake Smith Solicitors on 0114 266 6660.
