Rewriting the book on leases: The process of negotiation from scratch is reduced to a debate over details

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The Independent Online
WHEN Paul Clark, the head of property services with the solicitors D J Freeman, started acting on the sale of Gracechurch retail centre at Sutton Coldfield, in the West Midlands, last month, he took delivery of 10 boxes of leases for the 100 tenant stores, writes Elizabeth Heathcote.

It underlines the point he is trying to make to the legal profession and commercial property world - there is a huge volume of paper and work that may not be really necessary.

Boots Properties, part of the high-street chemist group, was examining the same problem two years ago. It approached D J Freeman to devise a way to save the time and money involved in having to negotiate a separate lease agreement with every tenant in multi-let developments.

Mr Clark's solution is the Leasebook. He believes it could mark a new era in lease negotiation. Boots is planning to use it in all future developments.

The Leasebook is simple and unoriginal, inspired by the agreements used in home insurance and car leasing. The idea is to extract the standard provisions, which represent the bulk of a lease, and deliver them in book form as a fait accompli to all prospective tenants. Particular provisions are catered for in a separate lease deed, specific to each tenant. The process of negotiation from scratch is reduced to a debate over details.

The benefit for the landlord is clear - the bulk of the legal cost occurs only once. Mr Clark proposes a separate Leasebook for each development, drawn up in advance and preferably in negotiation with key tenants.

The benefit for the tenant comes through the landlord's willingness to take a reasonable position from the outset and abandon the procedure of starting with the aim of haggling, thus saving legal fees.

However, there could be problems between the negotiators. What if the legal advice to the tenant is to refuse the Leasebook's terms outright, as one property lawyer insists would invariably be the case? What if the landlord's idea of reasonable terms does not correspond with every tenant's?

Mr Clark believes the cost incentive will persuade landlords to be realistic in the terms of the Leasebook and that tenants will respond to this. After all, he argues, any company buying an existing lease would face the same inflexibility.

He also believes the legal profession will see the wisdom of his system. 'There are going to be some lawyers who hate it,' he admitted. 'But less fees should translate to more profitable business if long negotiations are cut out.'