It goes without saying that you should be comfortable with the
rent you are paying, but the real challenge is to be completely
sure that the rent is appropriate for the space you are using. Some
questions to ask yourself could include:
Do you have access to common areas and elevators?
Do the measurements in the lease of the space you're using
include the thickness of the walls?
It might sound silly to check some of the more simple items, but
if you can negotiate a better price for the space you are using,
you'll be patting yourself on the back at the end of it.
You should also be aware that it's common for commercial
lease agreements to have an annual percentage-based rent increase.
It would be wise of you to negotiate this with your landlord, to
ensure a cap is put on this percentage. That way you can avoid
being stuck with unmanageable costs as the rent increases each
Can I do what I want with my leased premises and what
am I responsible for?
Before entering a lease, you should consider what activity you
will actually be engaging in on the premises. Commercial lease
agreements can have clauses that prevent you from certain
activities or define the activity that is allowed to be untaken on
the premises. You should ensure that your plans for your space can
The same should be said for any plans you have to modify the
property you are leasing. Ensure your lease agreement has clear
terms about what modifications or improvements can be made. For
example, if your business requires advertisements and signs to be
visible from the street, you should check that this is allowed
under the lease so you don't face problems later on.
Take the time to also check who takes care of the maintenance
and repair of a premises, air conditioning, equipment and
associated utilities. This will usually be shared between you and
your landlord however, you should make sure that your lease
agreement spells this out clearly so you aren't lumped with
unexpected repair costs.
How long am I locked into this thing?
You probably won't be surprised to find out that most
landlords like long-term lease agreements. This is because it
offers them the security of a long-term tenant. However, if your
business is new or uncertain, you may be offered a short-term lease
with an offer to renew. This may make your rent higher than the
long-term alternative, but it also gives you a way out if
you're not sure of the stability of your business or how long
you wish to stay at the one location.
Do I have any rights here?
You should check that your lease has a Right of Assignment
clause, to ensure you have the option to transfer your lease to a
new tenant. You should consider if there are any options to renew
the lease or expand the space you are renting, should you need it.
Talk to your lawyer about how your lease would be terminated, at
what penalty and if you need to provide your landlord with notice
of your intentions.
Have I had my lawyer check all the
If you are interested in commercial leasing you should always
seek legal advice to ensure you avoid sneaky clauses in your lease
that may be to the benefit of your landlord and not you. For
example, if you're leasing a premises in a shopping centre, it
is worth asking whether you have to comply with the centre's
fit out rules for your business, whether you are required to
contribute financially to the marketing and promotional activities
of the centre and whether your business would be affected by any
ownership plans to redevelop or expand the centre.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Do not depart from the contract terms, or encourage the other party to do so, unless you plan to alter the contract.
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