Monday, 23 June 2008

Don't assume you're off the hook

Directors could find themselves personally liable if there’s an issue over their company’s rented premises.

Sarah Heath, our Commercial Property Specialist, said directors must be aware that just because they rented their business premises, they were not safe from any problems that may arise.

“You may have assumed that as you rent the premises, if there are any issues that come up with the landlord, then they’d be the company’s problem. But even though the lease will probably be in the company’s name, as a director you cannot sit back and assume you have no responsibilities.

“As part of the tenancy agreement, you may have given a personal guarantee to the landlord, and this is the reason you should be careful. This means that if there are any difficulties with the lease, including unpaid rent, or a failure to complete agreed repairs, your landlord can pursue you personally for the money.”

Sarah said if, as a director, you had given a personal guarantee, the best approach was to try to resolve any issues through negotiation with your landlord.

“The chances are that you will probably have a full repairing lease – this means the company has to ensure the whole of the premises are maintained and repaired, not the landlord. And if anyone has an accident as a result of the state and condition of the premises, they could look to the company for compensation.

“But if the accident was as a result of a health and safety issue, directors could find themselves personally facing a prosecution.”

Sarah said companies should ensure at least one member of the board was responsible for health and safety issues. They should also look after the company’s obligations in terms of the repair and maintenance of the property.

“And don’t neglect your responsibilities under the Control of Asbestos at Work Regulations 2002 either, as you may once again face personal prosecution if you don’t manage the risks properly.”