Section A – Introduction

Managing Trustees across the Connexion are receiving requests from tenants of their non-residential properties e.g. shops or parts of the church site, to reduce or even suspend rental payments during the COVID-19 outbreak. These are exceptional times and Managing Trustees will find help and guidance for dealing with these types of requests from their tenants in COVID-19 FAQs 4 and 5, the FAQs section of the “Non-Residential Lease (COVID-19) Questionnaire” (Questionnaire) and the background paper; “Rent Concessions for Non Residential Tenants”. In particular, please bear in mind that as prudent charity trustees and in accordance with Methodist Church best practice, Managing Trustees are not encouraged to offer any concessions themselves.

Blake Morgan LLP, one of the law firms on the Methodist panel, have offered to help Managing Trustees who wish to agree rental concessions with their non-residential tenants by making a service available to them to help legally document these temporary arrangements as cost effectively as possible. Blake Morgan will produce a letter documenting the temporary arrangements that have been agreed between Managing Trustees and their tenants (Non-Residential Lease Side-Letter) for a fixed fee of £200 plus VAT. The Questionnaire has been designed specifically for this purpose and allows Managing Trustees to provide all the information required to allow Blake Morgan to legally document the temporary arrangement. The fixed fee has been agreed on the basis that Managing Trustees complete the Questionnaire in full and provide a signed and dated copy of the lease that the Managing Trustees have entered into with their non-residential tenant (the Lease). Please refer to the Newshub article “Non Residential Leases – requests from Tenants to a rent concession” for further details.

The service is available where:

  • Managing Trustees (together with TMCP) are the landlord of non-residential property held on the Model Trusts under a non-residential lease.
  • Managing Trustees’ tenants have indicated they are unable to meet some, or all of their rent as a consequence of COVID-19 and having considered the points in FAQ 5.1 and the availability of any Government or alternative help and support that may be available to their tenant (see the background paper; “Rent Concessions for Non Residential Tenants”), the Managing Trustees have decided to accommodate such a request.
  • There are no rent arrears which have arisen prior to COVID-19.
  • There are no ongoing or pending eviction proceedings (court action).
  • There are no proposals to vary any of the existing lease terms apart from those relating to payment of the rent e.g. to extend the lease term or for the tenant to give up any rights to break the lease to compensate the Managing Trustees for the proposed rent concession. If there are any such intentions please contact TMCP Legal in the first instance.

This process note sets out the steps to be taken if Managing Trustees are minded to agree rental concessions with their non-residential tenants and decide to use the service that has been offered by Blake Morgan to produce a letter documenting these temporary arrangements (see below). Managing Trustees can of course use a different solicitor. If Managing Trustees want to use a different solicitor then they should refer to the process referred to in COVID-19 FAQ 5.2 and contact TMCP so that we can approve the document recording the temporary arrangements.

Please refer to the AST Concession Process Chart for details of the process that is being offered by Sintons LLP in relation to similar rent concessions with residential tenants who occupy Methodist Model Trust property under an Assured Shorthold Tenancy (AST).

Section B – Process Chart

This process is to be followed where Managing Trustees wish to use the service offered by Blake Morgan to produce a Non-Residential Lease Side-Letter:

1.

Complete the Non-Residential Lease Questionnaire (COVID-19)  (Questionnaire)  to provide Blake Morgan LLP with all the information they require to document the temporary arrangement agreed between Managing Trustees and their tenant(s):


The Questionnaire is available using this link: Non-Residential Lease (COVID-19) Questionnaire

 
It is important that Managing Trustees complete the Questionnaire as fully as possible to provide the information that Blake Morgan need to produce the Non-Residential Lease Side-Letter.


=> If the Managing Trustees have completed the Questionnaire in full proceed to Step 3.


=> If the Managing Trustees are having difficulties completing the Questionnaire proceed to Step 2.


Note that Blake Morgan have confirmed that the fee of £200 plus VAT has been agreed on the basis that the Questionnaire is completed in full. Blake Morgan have said additional fees may be likely if information is missing/unavailable or the circumstances of your particular non-residential lease or the proposed variations fall outside the parameters of the circumstances provided for in the Questionnaire.

2.

Contact TMCP Legal for help in completing the information required in the Questionnaire if you do not understand what information you need to provide or need assistance.


TMCP may also hold a copy of the signed and dated lease that the Managing Trustees have entered into with their non-residential tenant (the Lease) on file. If that is the case TMCP can provide you with a copy which can then be sent to Blake Morgan along with the completed questionnaire.


Once the Questionnaire is complete proceed to Step 3.

3.

Send the completed Questionnaire to BOTH leoni.dempsey@blakemorgan.co.uk and legal@tmcp.methodist.org.uk (along with a complete, signed and dated copy of the Lease).


TMCP ask for a copy of the completed Questionnaire so that TMCP Legal is put on notice that Blake Morgan are instructed, we are made aware that an Non-Residential Lease Side-Letter is likely to be on its way and can ensure that resources are available to approve this quickly as part of Step 6.


=> Blake Morgan will proceed to Step 4

4.

Blake Morgan will document the concessions Managing Trustees have agreed with their tenant(s) as set out in the completed Questionnaire and send a copy of the draft Non-Residential Lease Side-Letter to the Managing Trustees for approval (copying in TMCP Legal).

 

=> proceed to Step 5.

5.

Approve the Non-Residential Lease Side-Letter – Managing Trustees.


Managing Trustees will review the draft Non-Residential Lease Side-Letter to ensure that it reflects what has been agreed with the tenant(s) and alert Blake Morgan immediately if there are any concerns so that these can be addressed and the final form of Non-Residential Side-Letter produced.


=> Once the Non-Residential Lease Side-Letter has been agreed by the Managing Trustees, proceed to Step 6.

6.

Approve the Non-Residential Lease Side-Letter – TMCP.


TMCP will review the Non-Residential Lease Side-Letter within one working day to double check that it follows the agreed form of side-letter and the information provided in the Questionnaire.


=> TMCP will confirm approval of the Non-Residential Lease Side-Letter or indicate any amendments that may be required so that Blake Morgan can proceed to Step 7.

7.

Blake Morgan will produce the final form of Non-Residential Lease Side-Letter ready to be signed by the Managing Trustees, their tenant(s) and any guarantor(s) and send this to the Managing Trustees (copying in TMCP).


=> Proceed to Step 8.

8.

The Managing Trustees can now enter into the agreed form of Non-Residential Lease Side-Letter and allow the varied rent to be paid (or suspended) in accordance with its terms:


The agreed Non-Residential Lease Side-Letter will need to be signed by the Managing Trustees, their tenant(s) and any guarantor(s) and then dated.


Blake Morgan will be able to provide the Managing Trustees with guidance on arranging for the document to be signed by the Managing Trustees, their tenant(s) and any guarantor(s) in line with the Government’s social distancing requirements.
Managing Trustees need to:

  • File a copy of the Non-Residential Lease Side-letter signed by the tenant(s) and guarantor (if appropriate) and the Lease with Church, Circuit or District deeds.
  • Consider and keep under review the terms of the Non-Residential Lease Side-Letter ensuring that these are followed closely.
  • Diarise the end of the Rent Reduction Period or Rent Suspension Period as set out in the Non-Residential Lease Side-Letter and ensure that rent reduction/suspension ends on the date specified and the shortfall is paid in accordance with the terms of the Non-Residential Lease Side-Letter.
  • Contact TMCP Legal as a matter of urgency if there is any suggestion that the terms will not be followed e.g. the tenant(s) is requesting a delay in paying any shortfall in rent beyond the dates set out in the Non-Residential Lease Side-Letter.

Managing Trustees need to bear in mind that immediately at the end of the period provided for in the Non-Residential Lease Side-Letter, the arrangements with the tenant(s) must return to normal. If there is a need to vary the arrangements again at that time, contact TMCP Legal as a matter of urgency.

 

Section C – Further Guidance

 

Managing Trustees may find the following guidance notes and documents of assistance:


If you have any queries in relation to the guidance in this document please contact TMCP Legal for further assistance.