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ARTICLE · 24 AUGUST 2022

Commercial leases - fancy something on the side?

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The main reasons Side Deeds are being sought by financiers & ways to prevent stalemates then transpiring.

AustraliaReal Estate and Construction
Timothy Borham
Timothy Borham
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It is becoming more prevalent, in connection with commercial/retail shop leases, for financiers of both Landlords and Tenants to seek the other party to enter into a direct "side deed". For example, the Tenant's financier will (in addition to taking a mortgage over the Lease), seek direct contractual relations with the Landlord in order to secure a variety of different rights in the event of default by the Tenant with the financier.

Unsurprisingly, stalemates are becoming commonplace in this regard.

Why would a Landlord create direct relations with the financier of its Tenant and increase its potential liability and risk?

This article briefly explores the main reasons the Side Deeds are being sought and ways to prevent the aforementioned stalemates transpiring.

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