Glossary of Commonly Used Terms in Commercial Property

This glossary is provided for general interest only and, whilst we have taken all reasonable care, should not be relied upon. For more specific advice, please do contact us.

Adler Clause	If a tenant wishes to dispose of a lease, this clause obliges them to first offer to surrender (give back) the lease to the landlord. Adler v Upper Grosvenor Street Investment (1957)
Adverse Possession	Occupation of land inconsistent with the rights of the true owner. If property is occupied illegally and without disturbance for in excess of 12 years, the legal owner may lose their right to recover possession. The Limitation Act 1980 (s15 (i)).
Antecedent Date	The date to which property being included in the rating list is valued by the Valuation Officer.
Break Clause/Option	This lease clause provides the landlord and/or the tenant with the right to terminate the lease before its expiry date. Specific circumstances and provisions will apply and statutory provisions may take precedence.
Chain	More common in residential property sales, this is a series of property transactions which are interdependent. Eg: Mr Red is dependent upon the sale of his property to Mr White before he can proceed with the purchase of property from Mr Blue.
(RICS) Code of Measuring Practice	A set of rules for the way in which buildings are measured to ensure consistency. Now replaced the International Property Measurement Standards (IPMS)
Dilapidations	Disrepairs to a property which breach the lease terms; commonly failures to redecorate, repair or reinstate. Usually recorded in a ‘Schedule of Dilapidations’ see below.
Dutch Auction	This is a frequently misused term. Strictly speaking it is an auction led by an auctioneer who quotes a higher than expected price and then gradually reduces the figure until it is accepted by a potential purchaser. That acceptor is then legally obliged to complete the purchase.
Engrossment	The final, formal version of a property deed, ready to be signed and sealed. Prepared by a solicitor following agreement of the draft version between the parties.
Estoppel	Prevents a party from breaking his ‘promise’, expressed or implied where another party has acted on the understanding that the promise will be kept. For example, if a landlord promises that he will not enforce a specific term of a lease and the tenant acts on the strength of that promise, the landlord cannot later change his mind.
Force Majeure	Something beyond the control of the parties eg ‘Acts of God’ such as floods and ‘Acts of Man’ such as strikes. Insurance cover and building contracts often seek to narrow the definition.
Forfeiture	Usually occurs when a tenant ‘forfeits’ their right to occupy premises because of their failure to comply with a lease term eg failure to repair. It is the right for a landlord to retake physical possession.
Freehold	The tenure of an estate in fee simple absolute in possession ie absolute ownership.
FRI Lease	Full Repairing and Insuring Lease. This means that the tenant is responsible for the full cost of keeping the property in good repair and paying for insuring the property.
Ground Lease	A long lease at a rent which ignores the value of any buildings or improvements on the land. Ie a lease for the ground only.
Head Lease	The leasehold interest held directly with the landlord and subject to one or more ‘under leases’.
Interim Rent	A temporary rent payable between the expiry of the current tenancy and the commencement of a new lease (or when occupation ceases).
Joint Tenancy	A joint owner holding property in undivided shares. Upon the death of one joint tenant the property is then held by the remaining tenants NOT inherited. Now such tenants can only be trustees.
Kiosk	Less than 15 sq m, enclosed retail outlet normally without toilet facilities. Able to be securely closed when there are no customers.
Landlord	The owner of an interest in land who grants exclusive possession of all or part of their land for a specific term through a lease or tenancy and in exchange for a consideration (rent).
Leasehold	An interest in land held for a specific term (length of time) or on a periodic tenancy (see below).
Lessee	Tenant (see below)
Lessor	Landlord (see above)
Listed Building	This is a building which is included on a list of architecturally or historically important buildings in accordance with the Planning (Listed Buildings and Conservation Areas) Act 1990. Graded I, II* and II. Any alterations to these buildings must be undertaken having regard for specific considerations and will be subject to Listed Building Consent in addition to planning permission.
Mezzanine	An intermediate floor, commonly found in a single storey warehouse unit, which provides additional floor area but does not necessarily extend across the entire ground floor area.
Mortgage	The interest in freehold or leasehold property held as security for a loan. It is a form of land charge.
Mortgagee	The party making the loan (see above).
Mortgagor	The borrower providing the property as security (see above).
Non-Domestic Rating Multiplier/Uniform Business Rate	The amount per £ by which the rateable value of a property is multiplied to calculate rates payable for the year (ignoring reliefs). The multiplier is set each year by Government.
Option to Tax (VAT)	The option for a landlord to choose whether or not to charge VAT on rent.
Periodic Tenancy	A tenancy which continues for an agreed period (weekly, monthly etc) until terminated by either party serving notice. This often follows the expiry of a more formal lease term.
Preliminary Enquiries	This is a list of questions which the prospective purchaser/tenant asks the vendor/landlord about a property, prior to entering into a contract.
Purchaser	One who buys land (buyer).
Quarter days	In England rents are traditionally due on these dates which are: 25 March – Lady Day, 24 June – Midsummer, 29 September – Michaelmas, 25 December – Christmas day.
Rateable Value	The rental value of the property at the Antecedent Date (see above).
Red Book	The ‘Best Practice’ document produced by the RICS which represents the official Valuation Standards adopted and enforced by the RICS.
Rent Review	A stated interval in the lease term (eg 3yrs, 5 yrs) when the rent is to be reconsidered. Commonly ‘upward only’ rent reviews are stated in the lease ie a lower rent cannot be negotiated.
Schedule of Dilapidations	A list of outstanding repairs/maintenance which form the Dilapidations (see above). Commonly prepared on behalf of the landlord by their building surveyor and served on the tenant by the landlord’s solicitor.
Sui generis	Used to describe a use of a property which does not fall within any of the categories within the Town and Country (Use Classes) Order 1987, as amended. Common examples include betting shops, beauticians and MOT centres.
Tenant	One who holds a tenancy – can be an individual or a corporate body.
Vendor	One who sells land (seller).

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