Red Tape: Archiving Retail Leases and Legal Documents

The Essential Guide to Archiving Tenant Documents explores the importance of archiving critical property documents for retail tenants.  From old-school title deeds and legal documents tied up with red tape to modern electronic storage options, the podcast emphasises the value of keeping comprehensive, accessible records. The host shares insights on how well-maintained archives can provide a competitive edge, help comply with legal requirements like EPCs, and protect against financial and legal risks. The discussion includes the evolution of archiving practices, the types of documents to retain, and various digital solutions for effective document management. 

00:00 Introduction to Estate Management and Accounts Payable

00:12 The Importance of Historical Documents

01:24 Modern Archiving Practices

03:46 Legal and Critical Property Documentation

05:22 The Role of Variations and Side Agreements

06:46 Practical Examples and Case Studies

10:56 The Evolution of Document Retention

12:18 Modern Tools for Document Management

13:46 Conclusion and Final Thoughts

Never miss an episode! Follow and like That Retail Property Guy on your favourite podcast platform - available on Apple, Spotify, Amazon and more.

Find out more and message us on the podcast website

Go to ThatRetailPropertyGuy for more on Gary Marshall, Smarter Estates and the TRPG podcast. You can also check out the TRPG Blog for reading versions of key episodes. 

For our niche 'Accounts Recoverable in Retail Property' business services, visit SmarterEstates

And find Gary and team on LinkedIn for regular updates and community info!

Transcript

0:00

Welcome to that Retail Property guy. In each podcast episode, we delve into topics relating to estate management and accounts payable from the perspective of a retailer as tenant. In this episode, let's discuss the kind of documents that back in the good old days, tenants used to bundle up in concertina wallets, bound tightly with red tape, possibly labeled title deeds or legal stuff. To be honest, as a seasoned estate manager, I've often found an archive of title to be a bit of a riveting read, like the backstory to a property, like an Origin's Tale for a movie character, you can learn a heck of a lot by perusing the older records. Understanding the background and history is key to understanding the present and the future. You can pick out the details that make all the difference. Spot the unusual clauses. Recognize the dependent relationships. Establish a framework that's the anger for what we are using today. It might just give you that competitive edge against the other guy who hasn't read any of the history. Possibly not even read the current lease. And again, if I'm being honest, I have encountered many managing agents who don't read leases, but still bill for expenses like service charge. Without fully understanding the restrictions, which should apply, and sadly, also their tenant counterparts who don't double check the supporting document. So just pay up in error, but are stuffy wallets crammed with musty documents? Now a thing of the past? Do the majority of tenants keep their essential documents only in electronic format saved onto a hard drive, or saved up to a cloud or both, but never printed out? It doesn't even seem to depend on volume on the stature of the tenant. A local independent tenant of a single retail outlet and their major high street multiple neighbor might just as easily make the same archiving choices, paper or electronic, or both. Usually there are many documents in paper form, but the archive must be complete. It must contain. All the relevant documents, not just a few. You shouldn't have to be looking in two places to try to build the picture of the contractual and occupational basis for your store. Not being able to find older documents can have a direct impact in your pocket Today, imagine the need to comply with an EPC, an energy performance certificate. This requires a calculation by an expert who considers factors such as insulation. So you replaced the roof a few years ago, but now you can't find the specification. Was insulation included? In the absence of clear info, the assessor might have to assume the insulation is below par, so downgrades your EPC, which might make your property unelectable or uns assignable. And in future years as legislation changes and carrots and sticks are applied, it might even result in you being hit with a penalty tax for being EPC, class F, not class B, who can say. But if you can pull a rabbit from a hat, produce the original specification, a warranty from the builder, a design drawing, showing that suitable sandwich layer of insulation, then hurrah compliance money saved everybody happy. It is of course pretty amazing how the retention of legal and other critical property related documentation has evolved. If a tenant moves on from those dusty document wallets, they could choose any number of alternative options for electronic archiving. Maybe just scanned files on a drive, maybe uploaded into a SharePoint folder, maybe an online portal that offers protection against drive damage, or even a wizzy application that can read the documents and abstract the data. Saving your team hours in reading time. Though maybe there is no substitute for reading time if you really wanna make the connections and score the advantage. And let's recognize we're not just talking about your lease or your tenancy agreement, your contract with your landlord. Oh no. The reach of property documentation stretches far beyond that. We're talking about leases and tenancies and licenses for occupation, but we also have to consider important documents like planning permission, building warrants, EPCs, those energy performance certificates, warranties from builders, schedules of condition, buildings of air reports, plans and drawings, maybe the freehold title deeds, or at least an abstractive title from the freehold, which is a means to demonstrate that your landlord. Holds a verified legal interest from which they can grant you a lease and a lease liability might not be encapsulated in a single document. Many leases are impacted by side agreements, maybe a personal concession to the tenant that they don't have to ensure that big plate class window or that they can pay the rent monthly. Not withstanding that the lease stipulates quarterly. Or that they can break the lease at the end of a specified period much earlier than the contractual expiry. But beware these side letters might be personal to a named company or person that for the duration of the period while they and only they are theier. Then the concession will continue, but it can't be transferred to another occupier, for example, by assignment. It's important to know this. Don't miss a trick, especially at renewal, when if you're aware that you have a concession like this, you might ask for a renewal of the concession as well. It'd be a shame to lose out on it just because you haven't done the essential reading. Then even during the course of a lease, many aspects of it can change. If there's a rent review and the rent changes, there should be a formal rent review memorandum or the substantial evidence, maybe an arbitrator's award, maybe just a letter from the landlord. And even if the review was agreed so as to not apply an increase what's known as a NI uplift, then be sure to archive that conclusion with a copy letter from the landlord agreeing to it. Otherwise, if the landlord changes or rental level, suddenly pick up what's to stop the landlord coming back for another bite of the cherry. Keep the proof. Protect yourself. And did the lease change in any other way? Has there been a deed of variation, maybe to surrender something surplus like a parking space, which was included in the original demise, or maybe to acquire one that wasn't. Maybe to change the rent review pattern from seven yearly to five yearly or vice versa, maybe to exclude a part of the structure from the repair clause, maybe to allow the construction of a new extension. Variations like these are commonplace and can have a substantial legal impact and a valuation impact. They can actually modify the legal commitment in the lease so they modify how that original lease will be considered a expiry for renewal if protected under the 1954 Landlord and Tenant Act. Don't lose the paperwork. It may be the only proof you have and you might just need it. I recall one example where a retailer was keen to expand their business in a popular high street location and was looking to use their first floor area as sales space instead of stock rooms. It seemed easy on the face of it, but the fire officer had a different view. The travel distance was too far from the further reaches of the first floor sales area to the ground floor exit into fresh air. The retailer wanted to open this space to the public, so they needed to find a way to comply the fire regs, and they found a very practical solution. They agreed with the tenant and the landlord of the neighboring property to allow them to create a fire door at first floor that opened onto their neighbor's flat roof, and then across the roof and down a steel staircase to safety this arrangement satisfied the fire officer. It gave the retailer valuable sales floor space. There was a modest fee payable to the neighbor. When the retailer's landlord later tried to ize the first floor at lease renewal, claiming it was now a valuable sales area. The occupying tenant was able to produce the document as important proof of this agreement being between the specific neighboring parties and nothing to do with the landlord. The moral of the story is of course, to keep the documents safe and secure and to know it exists. No point having a document if you've forgotten all about it and never check back through your archive. There could be all sorts of stuff that might initially seem innocuous, but later proves its weight in gold. Copies of any formal notices served under the 1954 Landlord and Tenant Act and the court's paperwork that was filed to protect the tenant's renewal rights. Or conversely, the court approved application that's authorized a tenant to opt out of his statutory 1954 ACT protection side deals with neighbors about parking arrangements, an exchange of letters allowing a neighbor to put their air conditioning unit or satellite dish on your roof. Even a way, leave agreement with a cable TV provider or BT open reach to run a neighbor's cable along your frontage. These can all become essential proof later. Empowering your right to terminate that privilege at any time if you need to. And what about planning consents or a certificate of lawful permitted development if the council has granted a specific permission? Keep a copy of the application, the plans, the backup consultations, and the expert advice. Don't leave it to chance that later. You might need to provide evidence of this lawful use and if you then can't easily put your finger on it. Convenience stores and other businesses in the entertainment sector should keep well archived copies of their alcohol licenses. And the plans that accompanied to demonstrate to any challenger that yes, they do have the right to sell alcohol. And yes, this does extend to Alfresco diners on the terrace outside. I recall one restaurant who was just about to submit a license request but hadn't included and indicated his Forough dining area. Only a last minute change in the submitted plan saved him from being legally licensed inside, but not out, which would've been hopeless. Many tenants occupy leases with a service charge each year. The landlord or their managing agent submits a budget pack with all the details of the proposed works and services, the expected costings, the proportional split of those costs between the various tenants and possibly the landlord for any retained areas. It's an absolute given that the tenant should retain these for future reference because the landlord or their agent will also have to provide an end of year reconciliation, which the tenant should carefully scrutinize and verify against that original budget. But sometimes the year end recs take an awfully long time to arrive, sometimes many years after the actual year end. What if the year end rec makes no sense or worse? What if the landlord has changed or the managing agent has changed? The diligent tenant has the proof of the original scope of the service charge to enable them to successfully negotiate any flawed claim for costs. A big financial saving could be made just thanks to a competent archive of some dulls dishwater documentation. Once upon a time, there used to be a common name for systems like this to recall the legal interests of land, whether a freehold, a lease, a sublease, an assignment of that lease, a tenancy a way, leave a license, a conveyance, a plan, an abstracted title, all the list could go on. The systems were known as terrier systems from the Latin word, terror, meaning land. The administrators who managed them, keeping everything in tip top order were also known as terriers. That use has kind of fallen by the wayside now, but the concept is still the same. Find somewhere safe and be diligent with the archiving. Consider the risks. Think about disaster recovery. There's no point in keeping the only copy of a valuable document in just one place if that place could be destroyed in a fire, for example. So think backups. Once upon a time again, the safest option might have been fireproof safes in a well constructed basement protected by a fire dampening system utilizing inert gas, not water sprinklers that could damage the files that the fire left behind. And managing this, there would've been a filing clerk, an administrator, a terrier charged with diligently putting the right documents in the right wallets, carefully tagged with the right labels. It might have been a seemingly thankless task, but then the thanks were profuse when that critical document could be summoned. Used in negotiations, winning the argument. Let's hear it for filing clerks everywhere, but now modern tools have taken over or at least offer the robust disaster recovery backup. The real paper-based documents probably still exist and probably still in a deep, dark basement, but it seems unlikely to find the whole physical terrier system in a retailer's physical back office. The digital age now offers PDFs, scanned files, JPEGs, and DWGs, possibly saved on a laptop, possibly backed up on a thumb drive, maybe SharePoint, perhaps a cloud-based location. Although this latter option starts to cost money, so it might not be the first choice for smaller operators. And at the high end, there are products such as contract intelligence from MRI, which uses OCR image recognition to recognize files and images and possibly to abstract key points, which can then be merged or compared with data in other systems. In the middle ground. There are locally created and simpler, but still highly efficient. AI tools, which can bolt into SharePoint and use AI to analyze, categorize, link, associate, summarize and report the contents. At the end of the day, you pays your money and you takes your choice, but the advice would have to be to do something, not nothing. A risk of damage to those irreplaceable documents could far outweigh the costs of a decent archive. Thank you for listening to that Retail Property guy. I hope you enjoyed today's discussion Don't forget to explore more episodes If you enjoyed the show, please consider leaving a review. Your feedback is greatly appreciated.