When negotiating a new commercial lease or extending an existing commercial lease in Scotland, tenants may request roof space to house plant and/or equipment serving the leased premises. While there will be practical and technical considerations such as identifying suitable areas, ensuring the roof is not overloaded, ensuring there are suitable cabling and access routes and the like; there are also several legal considerations to be borne in mind. Here we look at those legal considerations.
Who owns and / or controls the roof?
Before consenting to the installation of tenant plant or equipment, landlords need to have the necessary rights over the roof to do so. Do they own the entirety of the roof or is ownership shared among several parties? If it’s shared ownership, do they have adequate rights to pass those down to the tenant, or will they need third party consents? The answers to these questions will determine the rights which can be granted to tenants and also the timescales and costs of doing so, if third parties need to be involved.
Where the landlord does not own the roof, or does not have complete control of the roof area, the title deeds for the property will need to be checked to verify what rights the landlord does have and / or any third parties who need to be involved.
Where the landlord owns large premises, particularly multi-let premises such as shopping centres, it is likely that the roof will be part of the common parts (i.e. everything that is not leased or able to be leased to an individual tenant for exclusive occupancy). Here, the landlords should have rights under the occupational leases to control the common parts. The occupational leases should be checked to verify (a) if there is already a designated tenant plant area within which there is space for the current tenant’s plant; and/or (b) if the landlords have rights to vary the common parts by granting tenants exclusive areas of the roof.
In premises such as retail parks or standalone units again it is likely that the landlord owns the entirety of the building. However here the extent of the leased premises may well mirror the extent of the landlord’s title, meaning the roof could be included in the tenant’s demise. In such instances the lease will need to be checked to verify if (a) there are any conditions on the tenant’s use of the roof (e.g. not overloading); and (b) landlord’s consent is needed for the tenants to install plant on the roof, and any parameters for their consent (e.g. not to be unreasonably withheld).
Access and connection rights
While landlords may be happy to include the roof in the tenant’s demise, they also need to consider how the tenant will access the roof and any plant installed. They need to consider if the tenant can take access via its premises, or will need access rights over common parts or a neighbouring tenant’s roof.
Given tenants may require regular access to their plant and equipment once installed for maintenance, cleaning and testing purposes, landlords need to consider the access rights they are willing to grant e.g. access 24 hours a day, or when reasonably required, or emergency only. In multi-occupancy buildings, landlords should also consider the impact that could have on other tenants.
Where a property forms part of a larger building, the parties will also need to consider whether the tenant has adequate rights to enable them to connect into existing service media. In commercial leases, tenants are generally granted a right to connect into the landlord’s existing service media within the common parts. Landlords should ensure these rights are granted subject to sufficient landlord control, e.g. landlord consent being required and a tenant obligation to rectify any damaged caused.
Additional rights and agreements, such as wayleaves with telecoms or utility companies, may be required too. They may be in addition to, or in place of, specific lease rights granted to tenants. If they run through common parts then the usual process is that the landlord enters into such agreements, along with the tenant and utility/telecoms company. Again, the landlord needs to ensure that the route of such cabling or the like is suitable.
To protect the landlord’s interests, ‘lift and shift’ provisions should be considered enabling the landlord to require the tenant to relocate their plant and equipment in specific circumstances, e.g. if the landlord wishes to redevelop the site. The lease should clearly define the process, including notice periods and how relocation costs will be handled.
Listed building implications
Commercial leases usually require the tenant to have any planning permissions, building warrants and any other necessary consents in place prior to carrying out any such works; and then to do the works in a good and workmanlike manner in compliance with those permissions and all statutory requirements.
Where all or parts of the building are listed, listed building consent may be required. That has timing and cost implications in terms of obtaining the consent. It may also impose restrictions on the location, size etc of the plant being installed.
Guarantees
Parties should also consider whether the installation and presence of plant and associated equipment could impact any existing roof works guarantees or product guarantees or other guarantees and/or warranties. Any unauthorised alterations or works to the areas those guarantees and/or warranties cover could invalidate them. As with the occupational lease, any such guarantees or warranties should be checked to ensure any tenant work is carried out in accordance with their terms to preserve the guarantee / warranty.
Key take aways
Whilst granting a tenant of a commercial lease roof space for its plant and machinery is common and may seem straightforward, there are a number of considerations to bear in mind. Whilst most can be navigated, early engagement between landlord and tenant – and particularly their technical teams – is prudent. Ensuring that the commercial lease then adequately reflects those agreements and arrangements is also important.
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