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Liquidators, landlords and lease disclaimer: the business rates problem

In the case of Schroder Exempt Property Unit Trust & Anor v Birmingham City Council [2014] EWHC 2207 (Admin), the landlord’s liability for business rates after the tenant’s liquidator disclaimed the lease was confirmed.

The guarantor’s position is interesting. In Schroder it was argued unsuccessfully that the guarantor had an immediate right to possession. It is such a right that determines who is the “owner” for the purposes of the Local Government Finance Act 1988 and therefore liable for business rates if the premises are unoccupied. In Schroder the landlord had that right as a direct result of the disclaimer.

Perhaps if the guarantor had separately guaranteed an amount equivalent to the rates until the landlord entered into possession, the practical result might have been different.

The consequences of liquidators exercising their unique powers – such as disclaimer – are not always fully appreciated.

 

 

Date: 18th July, 2014
Author: Chris Laughton

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