Real Estate Tip of the Week: CRAR – Pay the Piper
A new regime (CRAR) comes into force on 6 April, regulating the recovery of rent arrears from commercial tenants by bailiffs…
Published 7 April 2014
In June last year we reported on the High Court decision in Friends Life v Siemens whereby a break notice that failed to comply with the express provisions of the break clause was nonetheless held to be valid. The landlord appealed against the decision and the Court of Appeal judgment was handed down last week.
In what might be seen as a return to the orthodoxy of previous decisions, the Court of Appeal has re-iterated that those serving notices under break options have to follow the letter of the clause. The Court said that the answer to the question "has the tenant correctly followed the terms of the break clause?" had to be answered by a "yes" or a "no", and not a "maybe".
Lord Justice Lewison said "the clear moral is: if you want to avoid expensive litigation and the possible loss of a valuable break, you must pay close attention to all the requirements of the clause, including the formal requirements, and follow them precisely".
In line with our advice in our previous tip, careful thought is needed when serving or receiving break notices. If you serve a notice it needs to follow the wording of the clause, and if you have one served on you, you should seek a legal opinion on whether it complies with the requirements of the break clause (and make sure you do nothing to be seen as accepting it as valid in the meantime).