Consider this if…
- You hold a whole building or site and sublet parts of it
- You are granting a head lease to an operator who will sublet
- Your obligations to your landlord and to your occupiers do not line up
- An occupier is in default and they are not your direct tenant
- You are being asked to consent to arrangements underneath your lease
- The head lease is ending and there are occupiers still in place
How it works
We read the whole stack
The head lease and every sublease or licence under it. The problems almost always live in the differences between them.
Today
We map the gaps
Obligations you owe upwards that you cannot pass downwards, term mismatches, insurance and repair gaps, and make-good that does not add up across the layers.
With the review
We fix the documents
Drafting or amending the head lease and the documents below it so the obligations mirror, consent regimes are workable, and the end of the term works in one direction rather than three.
Quoted before we start
We deal with defaults and endings
Recovery where the occupier is not your direct tenant, and the orderly end of a head lease where people are still in occupation.
Quoted stage by stage
Fee
Quoted in writing before we start
GST inclusive
We quote a fixed fee in writing before any work begins.
Layers are where leasing goes wrong
A single lease between an owner and an occupier is a two-party problem. Add a layer — a head tenant who sublets, an operator who licenses space, a building taken as a whole and split — and the risk moves into the space between the documents.
The head tenant in the middle owes everything upwards and can only recover what it has written downwards. Every mismatch is theirs.
Making the layers line up
Obligations. Repairs, insurance, outgoings, permitted use, compliance with the landlord's rules and make-good should pass down in the same terms they come up. Where the head lease imposes something on the whole premises and the subleases divide the space, the apportionment needs to be written rather than assumed.
Term. Nothing underneath can outlast the head lease, and options in the documents below are meaningless unless the head lease supports them.
Consent. If the head lease exists so that space can be let underneath, it should permit that in advance, on defined conditions, instead of requiring a fresh consent for every occupier.
Ending. The end of the head lease should not be the first time anybody asks what happens to the occupiers. Make-good in particular has to work across the layers: a head tenant left obliged to return a bare shell, with subtenants entitled to leave their fit-out behind, is carrying a bill nobody priced.
Defaults down the chain
When an occupier stops paying, the head tenant's obligation upwards continues unchanged. Security taken from occupiers, and the right to act quickly on it, is what protects the party in the middle.
For the head landlord, the position is the reverse: your rights run against the head tenant, not against people further down the chain who are not in a direct relationship with you. Recovering possession, and deciding whether you actually want the occupiers to stay, needs to be worked through on the documents before anything is served.
Getting advice at the right time
These structures are cheap to design and expensive to unpick. The best time to look at a head lease is before it is granted, or before the first sublease under it is signed — not when the layers have already come apart and everyone is reading their document for the first time.
Frequently asked questions
What is a head lease?
The principal lease between the owner and the tenant, from which any sublease or licence is carved. If you occupy under a sublease, the head lease is the lease above yours, and it governs what your immediate landlord is able to give you.
Can I recover possession from someone who is not my tenant?
Not in the same way. A head landlord's rights run against the head tenant, and an occupier further down the chain is generally not in a direct relationship with you. What you can do depends on the documents and on how the head lease ends, which is exactly why the structure should be designed with that day in mind.
What happens to subleases if the head lease ends?
As a general rule, subleases depend on the head lease and are at risk when it ends. That is a serious problem for occupiers and often for the head landlord too, who may want to keep them. Direct arrangements can be put in place, but they have to be agreed in advance.
Should the documents underneath mirror the head lease?
As closely as possible. Every obligation you owe upwards that you have not passed downwards is an exposure you carry yourself — repairs, insurance, outgoings, make-good and permitted use are the usual offenders.
Do I need consent to grant subleases under my head lease?
Usually. Most head leases require consent for subletting or licensing, sometimes on stated conditions. Where the whole purpose of the head lease is to let space underneath, that should be negotiated into the head lease at the start rather than requested deal by deal.
Related services
Send the documents underneath it as well if there are any.
Send us the head lease