Offer to lease – beware
Do not sign a lease or an offer to lease unless you are certain you want to be bound to the premises for the whole term, pay the rent and be subject to the conditions. An offer to lease will usually include an obligation that you lease the premises and if you decide not to go ahead you are likely to be required to pay out the whole term.
You should seek legal advice before you sign any document relating to a lease.
What is a Commercial Lease?
A commercial lease is a legally binding contract between a business and the owner of a commercial property.
These documents are more complicated than residential leases, because the lease is usually customised to the individual situation. The lease terms and conditions need to be carefully read to make sure that they match the needs of your business, as any mistakes at the beginning could be costly to your business.
Can I negotiate the terms?
Yes, lease terms are often negotiable. The specific terms or restrictions which may be up for negotiation include the rent amount, rent increases, the duration of the lease, the modifications you can make to the property and whether you can transfer or assign the lease.
What else should I look for?
This is hard to answer without knowing your specific situation and your business requirements. Some of the common things we find we need to discuss with clients include:
- If you’re a new business, check that the length of the lease suits you, as many landlords prefer to lock in a longer lease.
- There are several ways to calculate rental increases so make sure you understand and agree to the one chosen by your lessor.
- Read the section on property improvements very carefully as it should set out who can make changes, who pays for the modifications and whether you have to return the property to it’s original condition at the end of the lease.
- Make sure the lease includes all of the areas you expect to use including bathrooms, parking areas and common areas.
- Be careful that the lease doesn’t stop you from erecting signs in certain areas.
- Ensure the make good requirement at the end of the lease fair and reflects what you and the landlord have discussed.
Please seek legal advice before you make any commitments, including signing an offer, paying a deposit or moving anything you own into the property.
How do I end a lease early?
Usually a lease must continue until the end of the term agreed in writing. There may be some circumstances in which the parties to the lease agree to end the lease early. In these cases it is important to document the agreement to end the lease early. A deed of surrender can be used to document the terms on which a lease ends including obligations to make good the premises, final payments and the end date among other things.
Contact us to for legal advice specific to your lease agreement.