5 Essential Things to Look Out for in a Lease Agreement
1. Ensure that the Lease includes everything that’s been agreed
It might seem obvious but we commonly see draft leases that do not reflect the entirety of the agreement that has been reached. Remember those landlord works that were agreed to during negotiations? If they are not in the lease, then they are not part of the deal.
2. Make sure you understand how much money you are up for
While the rent payable - at least during the first year - is usually easy to identify, rent increases and outgoings are often forgotten. A lease will typically tell you the proportion of outgoings that you will be liable for, but do you know what that means in dollar terms? So, make sure that the lease requires the landlord to provide you with the previous year’s outgoings and an estimate of the coming year’s outgoings.
3. Is there an option to renew and when can you exercise it?
This is of critical importance. If you don’t exercise the option to renew in time you can end up losing the right to occupy the premises. Typically, an option needs to be exercised no earlier than six months and no later than three months before the expiry of the initial term.
4. What are your maintenance and repair obligations?
This is related to item #2 above in a financial sense and it is of critical importance that you understand what items are your responsibility in terms of maintenance and repairs, how often certain fixtures and fittings need to be serviced and what records need to be kept as to the servicing.
5. What happens at the end of the lease?
It is important to know what your rights and obligations are at the conclusion of the lease period. If you remain in occupation after the expiry of the lease, what terms and conditions apply to that tenancy? If you vacate the premises, what are your make good obligations.
Whether you are the landlord or the proposed tenant, we can assist you with all of your commercial leasing needs. We help educate and advise clients about the finer points of leasing to avoid disputes and costly mistakes.
We can assist you with:
- Reviewing and advising as to the terms of a lease;
- Drafting a lease;
- Negotiating amendments to a lease;
- Amending, transferring or surrendering a lease; and
- Enforcing your rights under a lease