Take care with the Festive Pop (Ups)

We’re heading to that time of year when people have things to sell, and buyers are keenly looking for gifts, for Christmas.  We’ve no doubt all seen the calendar shops and other pop up shops appear and disappear in otherwise empty buildings and spaces before the Christmas lights have even been taken down.  Other times, you will see garden sheds converted into little grottos or in a collection, emulating the Christmas markets of continental Europe.  However, land owners need to be careful about what they agree if approached by a budding Pop Up shop trader.

A High Court decision from last year provides a cautionary tale where a lack of consideration created issues for the land owner.

Licence or periodic tenancy?

In Gilpin v Legg [2017] EWHC 3220 (Ch), the claimants were owners of five beach huts sited on fields belonging to the landowner.  The High Court considered whether occupation of the land was by licence or under a periodic tenancy.  The huts occupied the same space during their use, which meant that the landowner was excluded from occupying or using the land on which the huts sat. The judge stated that whilst that right subsisted and was being enjoyed, the landowner could not use or exploit the land in any other way.  The High Court held that the claimants’ occupation of the plots of land on which their huts stood was that of a periodic tenancy from year to year given that they had exclusive possession for a term at a rent.

Further, the judge found the huts to be chattels i.e. tenant’s removable possessions, on the basis that there was either no or only a very slight degree of annexation to the land. The huts were capable of being moved without risk of substantial damage when they were first placed on the plots: the fact that they had deteriorated through the passage of time should not affect whether they were a chattel or a fixture.

So, what should land owners do?

Here, there was a significant lack of documentation relating to the terms of occupation.  The nature of the relationship must be clearly documented, ensuring that a land owner will obtain their property back in the condition expected.  It is possible to create a variety of land occupation agreements but care must be taken to consider what the parties require and the risks of not achieving what you expect.

These short term stores and stalls are good for both the land owners and occupants. From the land owner’s perspective, they can encourage footfall to a retail area, generating more custom for adjoining premises while providing an income for the landlord, offering a short term solution to the problem of a vacant unit.  For occupants, a short term let allows them to take advantage of any seasonal fluctuations without the risk of a long term lease, coupled with the advantage of trailing a new location, product or services on prospective customers.

The main options are a licence or lease

For a licence, this creates a personal interest to occupy only for the occupant but care needs to be taken to ensure that that is what is created.  This can also create options for the land owner as they may be able to allow different occupancies at different times e.g. on different weekend or late night shopping events.

If the land owner is a tenant themselves, permission for allowing others to use or share occupation or possession will need to be clarified by further inspection of their lease.  Breaches of lease may lead to disputes where compensation is sought based upon not only the loss to the head landlord, but the gain to the person permitting the pop up shop.

You should also consider…

Other matters to consider include the provision of utilities to the occupant.  Who will be responsible?  How will it be paid? Additionally, what if there is disrepair?  The land owner will want to ensure that the premises are returned in the same condition.  All such matters need careful thought.

In any event, Pop Ups are here to stay.  It is essential to check what you agree as failure to do so may mean that they Pop Up and the issues surrounding it will stay with you long after the festive cheer has passed.

Stephens Scown has experience in advising clients in relation to such arrangements if you need to grant the agreement or deal with issues that arise.  Get in touch by telephone 01726 74433 or email drsa@stephens-scown.co.uk.