Many businesses operated from rented premises. Unfortunately, not all business operators go into leasing arrangements with full a understanding of all the issues covered in their leases.
If you are thinking of leasing a property to conduct your business or are renewing your existing lease, you should have our solicitors at Alexander Law review your lease and have all of your rights and responsibilities explained before you sign.
What is a lease?
A lease represents your right to do business in a particular location and gives you a legal interest in the property for the term of a lease. A lease is a contract between the tenant (lessee) and the landlord (lessor) and its purpose is to identify the parties, premises, conditions, rights, responsibilities and liabilities. General information such as rent, options for renewal, rent reviews and contributions to outgoings will be specified in the lease; more complex conditions can be included by agreement.
What do I need to know before signing a lease?
The terms of a lease are negotiable, which means all the conditions under which you occupy the premises must be contained in your lease. This makes leasing business premises are more complicated and probably more important process than renting a place to live. Professional advice from our solicitors at Alexander Law is essential. Seek professional answers to all your relevant legal questions before you commit:
- When does the lease start? What period of time does it cover?
- When taking over an existing lease, how much time is left to run’?
- What options are available? ls it renewable’?
- What’s the rent? ls it paid weekly, monthly or in advance?’ What is also payable or am I being ripped off?
- ls a deposit or other payment required?
- Who pays the legal costs for establishing the lease?
- How are rent increases worked out?
- What happens if rent payments are late?
- Are there additional charges for outgoings? How are these charges worked out?
- Who is responsible for taking out what insurance? Does insurance cover additional rental or accommodation costs in the event of damage by fire?
- ls there a right of assignment (or transfer) clause included in the lease? Am I going to be slugged with payments or expenses when it comes to doing this?
- Does the lease have an arbitration clause for settling any disputes?
- ls sub-letting possible? Are there conditions on this?
- Does the lease require you to maintain the premises? At whose cost?
- ls there a requirement to return the premises to the condition it was in before leasing?
- When you leave the premises, are there any restrictions on you removing ﬁxtures, ﬁttings or furnishings you have put in?
- Do you have an option to buy the premises?
- Can the premises be independently valued?
- Can you end the lease before it expires? If so, what are the conditions?
- Are there restrictions on the type of business, its goods or operating conditions such as trading hours? How will this crash your plans to expand or diversify?
Other points to consider
Leases are special documents with special conditions. They are also contracts with ordinary contractual conditions. The following are some of the contractual matters you should also be aware of:
- A lease with low rent at first may increase sharply in the ﬁrst annual review;
- If you are going into a retail business, the Retail Shop Lease Act may apply to your lease which means you should be familiar with its provisions. You need to discuss this with us;
- You should begin negotiations to extend your lease long before it expires if you plan to stay in the premises;
- Once you sign your lease you are legally bound to fulfil all the conditions – like paying rent and outgoings – for the full term;
- Never rely only on a verbal agreement to modify any part of a lease;
- Your landlord may be open to negotiation on the lease even if this wasn’t initially indicated.
- If you are unhappy with any of the conditions in your lease, make an offer to your landlord, but always leave room for negotiation (keep in mind that landlords are business people and will expect a fair return on their investments)
- As with any important document, you should keep a copy of your lease in a safe place so you can refer to it should the need arise.
We can help
Leasing a business premises is a big commitment. To ensure you are able to meet all the requirements within your lease, you should read through it carefully, mark any points you do not understand and ask us to clarify them for you.
Contact our Solicitors at Alexander Law on (07) 3369 0766 for clear professional legal advice.