Changing trends in commercial leasing could give rise to a wave of litigation when long leases signed before the 2008 recession expire, according to a new partner at law firm HBJ Gateley.
Joan Devine, who joined the firm on April 25, said disputes over dilapidations payments at the end of contracts had increased and expected more to surface over the next 12 months, with more than 300 commercial leases due to expire in Glasgow and Edinburgh alone by May 2017.
She said occupiers were increasingly disinclined to accept liability for returning premises to their pre-lease condition and were instead pushing landlords to share in the cost of ‘reasonable’ restorative works.
But she pointed out that recent court decisions on dilapidations cases did not provide definitive guidance for occupiers or landlords.
Joan said: “With the number of long leases likely to expire in the short-term I would expect disputes to arise. Tenants do not want to pay more than is absolutely necessary and Landlords are keen to recover as much as possible to allow them to put right any wear and tear caused to the building during the tenant’s occupation. Dilapidations costs can run into hundreds of thousands of pounds, so there is often a lot at stake.
“The terms of leases tend to be shorter since the recession with less onerous repairing obligations. When longer leases, entered into before the recession, come to an end the occupiers may be looking to restrict their liability for dilapidations.
“It is important to carefully review the wording of the lease as the contract wording can be open to interpretation. ”
Joan joins HBJ Gateley’s Glasgow dispute resolution team from Anderson Strathern, where she was a litigation partner. Her experience covers a range of industry sectors, and she will primarily focus on working with HBJ Gateley’s real estate clients where dispute resolution is required.
Alison Newton, who leads the Glasgow office, said: “Joan’s reputation as a smart, effective and commercially-minded dispute resolution lawyer makes her a strong fit for HBJ Gateley, and she’ll bring many years of valuable experience to our clients.
“She is an excellent addition to the team, and we’re looking forward to her contribution to the Glasgow office and the firm as a whole.”