4 Important Aspects to Consider Before Signing a Commercial Lease

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By Admin Desk

If you’re renting a property in Australia, you’ll undoubtedly know that entering a commercial lease is a huge step. It doesn’t matter whether you’re opening a shoe shop, café, or running an industrial facility, you’ll be tied to a commercial lease in some form or another.

If you’re a first-time commercial property lessor, these lease agreements can seem a little overwhelming. Using the services of one of the commercial lawyers Melbourne law firms offer won’t only streamline the process but will also give you peace of mind that everything has been done correctly.

4 Factors You Need to Know About Commercial Leasing

You might think entering a commercial lease is the same as signing a lease for the one-bedroom apartment you rented when you got your first job. To some degree it is, but there are also a few differences you should be aware of.

What is a Commercial Lease?

If you don’t own the building you’re going to trade out of, you’ll be signing a lease with the person who does own it. A commercial lease is the binding legal document that outlines the rights, responsibilities, and obligations of both the tenant and landlord regarding the upkeep of the premises. It also outlines the payment responsibilities.

A commercial lease outlines the payments you’re expected to make for the period you’re using the building. It also details the obligations of the landlord to ensure that you aren’t spending all your profits repairing a building.

What Items are Covered in a Commercial Lease?

While some of the points discussed below will be similar to the lease you sign when you rent a home, it’s important to note there may be differences and clauses. Always ensure the lease agreement has your business’s best interests (and profits) in mind.

The most common points include the following:

  • The length of the lease.
  • The agreed-upon rental amount for the duration of the lease.
  • How must rent be paid? Also, by when? Is it paid directly to the landlord or a managing company like a rental agency?
  • What repairs are covered by the landlord? These usually include roof and plumbing repairs.
  • What repairs and services won’t be covered by the landlord?
  • What modifications can the tenant make to the building? For instance, if you’re opening a restaurant, can you install additional kitchen plumbing?
  • What modifications can you make to the outside of the building? This includes the parking area if it’s covered by the lease. For instance, can you cover a section to provide your clientele with covered parking?

What is a Commercial Lawyer and Do You Need One?

While the above aspects seem simple enough, it’s important to get the professional opinion of a commercial lawyer before agreeing to anything. Commercial lawyers specialise in the various facets of lease agreements and will easily be able to tell you if the contract is above board.

A commercial lawyer will also be able to tell you if there are aspects that have been left out of the contract that will result in financial loss to your business down the line. Questions such as, “who will repair the building in the event of a hurricane?” might not be on your mind on the day you sign but could present a problem when it happens!

What Services can a Commercial Lawyer Provide in Terms of Your Lease Agreement?

A commercial lawyer can scrutinise the proposed lease agreement and offer you the following services:

  • Review the proposed lease and ensure that your rights as a business owner are protected
  • Negotiate pricing based on location, need, and condition of the building
  • Check the lease for potential clauses that could result in litigation
  • Ensure there’s a lease termination clause and specify the conditions
  • Ensure rental reviews are in place
  • Review any pre-let arrangements to ensure you get the best terms and conditions
  • Review conditions and costs about lease renewal as well as the administrative fees associated with these renewal contracts
  • Ensure the lease period is within reason and list the circumstances that could amend or change these dates
  • How to deal with breaches or litigations should they arise as a result of the landlord defaulting on his binding agreement?
  • Ascertain that there are no hidden costs or administrative fees that haven’t been disclosed upfront

Final Thought

Commercial leases can be quite technical, especially when there are specific clauses tied to the type of property you’re leasing. Hiring a commercial lawyer will ensure that the leasing agreement protects and benefits both parties and falls within the law.

The commercial lawyer will also ensure that you, as the tenant, understand all the rights, obligations, and clauses included in the contract. If the lawyer has been involved in the agreement from the onset, it’ll be easier to deal with potential litigation should it ever arise. Protect your interests, invest in a commercial lawyer before signing on the dotted line!