‘You don’t talk/listen to me’. Prospective tenants and property lawyers must communicate
With a career spanning 40 years, Karin Horsley has ‘been there, seen it, done it’ when it comes to property deals. Here Karin shares her thoughts on what can help ensure successful working relationships between clients and lawyers.
Is it true that ‘lawyers are from Mars and tenants are from Venus’? We often hear reports across the industry about how tenants taking a new lease and their property lawyers may unwittingly approach a transaction with different perceptions of their respective roles. For example, the tenant may anticipate a limited due diligence and negotiation on the lease terms whilst the lawyer, wanting to do the best possible job for their client, carries out a full and detailed investigation of title and extensive negotiation of the lease.
An unfortunate outcome is that the tenant complains about unjustifiable and excessive costs whilst the lawyer believes they have acted in accordance with instructions. Inevitably divorce follows – the tenant does not instruct the lawyer again, and the lawyer feels let down and disillusioned.
How can the tenant and lawyer avoid this predicament? Communication is key. Here’s how we ensure the expectation of our clients and lawyers are aligned. And whoever you use for your legal advice, these insights will help ensure tenant/lawyer relationships get the deal done.
Agreeing instructions
Commonly a prospective tenant will telephone or email the lawyer to provide details of the acquisition of a new lease. Often such details are limited to the bare terms of the lease – term and rent. The tenant asks for an estimate of costs or a fixed fee.
At that point, the lawyer should ask questions about the property, the tenant’s commercial business reasons for taking the lease, the tenant’s timetable and other matters relating to the lease and any agreement with the landlord. These discussions are fundamental to both tenant and lawyer understanding what the tenant wants and how it can be achieved. If they do not take place, there is already a disconnect: the lawyer does not fully understand the tenant’s requirements, and the tenant doesn’t know what work is needed.
The lawyer submits a required formal letter of engagement, setting out the fee estimate and scoping the work included for those fees. The tenant should raise any issues about the scope with the lawyer; then the scope can be settled. An agreed scope is the basis of a sound relationship.
Working on the transaction
The relationship may still founder if there is inadequate communication between the tenant and the lawyer during the transaction.
Delays may result from the parties not making clear what they expect from time to time. For example, the lawyer sends the draft lease plan sent by the landlord’s solicitor to the tenant to check that it is correct. The tenant thinks, ‘that’s fine’ but doesn’t tell the lawyer. They don’t know that the lawyer cannot carry out searches until they approve it. An explanation could avoid delay.
The lawyer realises the draft lease doesn’t cover all the points the tenant thought agreed and tells the tenant that the lease is not correct. The tenant expects the lawyer to take up the issue with the landlord’s solicitor. The lawyer thinks the tenant will speak to the landlord. Nothing happens. Lack of communication again causes delay.
Both lawyer and tenant must monitor the scope of work. A tenant should not expect the lawyer to carry out work not covered in the scope without additional fees. The lawyer, however diligent they may be, must not exceed the agreed scope of work without the tenant’s agreement on both work and fees. Keep talking!
The lawyer usually provides a report on the title and lease. However urgent completion may be, the tenant should read and run through the report with the lawyer if they have any questions or do not understand an element of the transaction. Communicate any concerns before completion as it is too late afterwards.
Completion
The best call from the lawyer to the tenant confirms completion has taken place, and the tenant has the lease on the terms it originally agreed with the landlord. The lawyer will also appreciate the tenant’s call to confirm their bill has been paid!
It really doesn’t have to be true that ‘lawyers are from Mars and tenants are from Venus’; following these simple steps can prevent prospective tenants and their lawyers from being on different planets.
This update is for general purposes and guidance only and does not constitute legal or professional advice. You should seek legal advice before relying on its content. Greenwoods Legal LLP is a Limited Liability Partnership, registered in England, registered number OC306912. Our registered office is Queens House, 55-56 Lincoln’s Inn Fields, London, WC2A 3LJ. A list of the members’ names is available for inspection at our offices in Peterborough, Cambridge and London. Authorised and regulated by the Solicitors Regulation Authority, SRA number 401162. Details of the Solicitors’ Codes of Conduct can be found at www.sra.org.uk. All instructions accepted by Greenwoods Legal LLP are subject to our current Terms of Business. VAT Reg No: 161 9287 89.