Time being of the essence is a legal phrase which is often seen in leases in order to stipulate when something must be done, or not done by.
When a clause is time dependent, such as a break clause, you will generally find wording within that clause that “time is of the essence”. This is extremely important as it means that the clause in question only applies on the date mentioned. Therefore, if your break date is the 1 January 2030 and time is of the essence, you can only break your lease on the 1 January 2030, and you must ensure that you have complied with the terms of the clause in order to enable this.
For instance, you will likely be required to give a certain amount of written notice on the other party, in order to exercise your break clause. If this is 6 months for a break date on the 1 January 2030 and time is of the essence, the break notice must have been received by the party absolutely no later than the 1st July 2029. If it is received after this date then due to “time being of the essence” then you would be unable to exercise to the break.
Time is often not of the essence with regards to rent reviews and this is of considerable benefit to the landlord. This means that the rent review does not have to be carried out on the rent review date set in the lease but can be carried out at any time thereafter and for the increased rent to be backdated to the date set in the lease.
For example, if the rent review date was the 1 January 2030 and, provided that the rent review clause did not have a statement within it that time was of the essence, the landlord would be entitled to carry out the rent review, for instance, on the 1 January 2031 and claim back a year’s increased rent (including rent) from the tenant.
These are just some examples of instances where it is important you understand the clauses and terminology used within your commercial lease to avoid any costly mistakes or disputes. If you are a commercial landlord or tenant looking for a commercial property solicitor to draft or review your commercial lease, get in touch with our specialists at Farleys today on 0845 287 0939, complete our online contact form, or use the chat button below.