Guide To Side Letters

Side letters are often used in commercial property to grant certain concessions to tenants when certain aspects of a lease such as clauses or rent need to be adjusted. Even though the use of a side letter is common in these cases, it may not provide sufficient protection for landlords if a tenant decides to contest it in court.  

So side letters, while offering a useful addition to an agreement between the tenant and landlord, should not be seen as necessarily legally binding unless all the required boxes have been ticked in when drafting the agreement. Failing to do so can leave a landlord vulnerable  

Vivienne Westwood v. Conduit Street Developments Limited (2017) provides one example of a side letter being seen as landlord biased. The side letter contained an agreement that the tenant pay a lower rent for the first 10 years of a 15-year lease.  

When the landlord subsequently attempted to terminate the side letter when the rent was paid late, the tenant was able to successfully argue that the landlord’s decision to terminate the side letter acted as a penalty.  

It is also important to note that side letters only apply to the parties in the agreement and cease to apply when there is a change of landlord or tenant and this itself can cause problems if the change isn’t disclosed to the parties concerned.  

If you are in any doubt about the validity of a side letter, take legal advice from an appropriately qualified solicitor.