Taking on a new lease over premises from which you want to operate your business is a major commitment, particularly if your lease is not considered a “retail shop lease”.
Tenants in commercial leases are not provided the same rights and protections as their retail counterparts.
Here are our top 3 tips for those looking to lease commercial premises:
1. Get a lawyer to review, advise and negotiate the lease terms.
Commercial leases always heavily favour the landlord, so, it is important that you obtain legal advice from an experienced property lawyer from the outset to advise and assist with negotiating the lease terms.
A lawyer experienced in lease negotiations will be able to identify terms that should be negotiated so that the obligations and rights of the parties are balanced and reasonable in the final lease.
2. Seek advice even at the pre-lease stage.
We recommend that you seek legal advice even at the pre-lease stage when the landlord or its agent sends you an offer to lease (OTL) or heads of agreement (HOA) for signing. Once signed by both parties, the OTLs or HOAs are used by the landlord’s solicitor to draft the lease documentation.
It may be difficult to negotiate with the landlord to alter your position in the lease on specific terms that you have already agreed to in the OTL or HOA.
3. Ensure any leasing deposit paid to the landlord or its agent is refundable if the lease does not end up proceeding.
Tenants should ensure that their leasing deposit (which is usually applied to the first few months’ rent) is capable of being refunded to you if the lease does not proceed.
Please note that you may have to pay the landlord’s legal fees for preparing the lease documents if you choose not to proceed. However, this amount should be capped. Your requirement to pay a leasing deposit is usually found in the OTL or HOA.