Business partnerships: applying for a new lease

A recent Court of Appeal case illustrates the difficulties that can arise when a business partnership operates from shared premises but does not give full consideration to the legal structure at the outset. The court held that an application for a new business tenancy made by one of the two business partners was not a valid application. Both joint tenants must join in any application for a new tenancy unless the tenants can take advantage of one of the statutory exceptions.

There is an exception for partnerships where not all of the joint tenants continue to use the demised premises for the purpose of the partnership business. However, where the premises continued to be occupied by both partners for the purposes of the partnership business, the business was not carried on “by one or some only of the joint tenants”, meaning that the conditions for the exception to apply were not met.

Some businesses (such as doctors and dentists) often practise from shared premises, either in partnership or on their own account, and there will be circumstances in which vesting property interests in a special purpose vehicle, such as a limited company or a limited liability partnership, may help to avoid disputes over both ownership and entitlement to occupy.