Leasing a commercial property has many considerations, such as the amount of rent, the length of the lease and the terms of renewal. To avoid disputes and protect your rights, you should always have a commercial lease agreement lawyer to review your lease.
What is a commercial lease agreement? It is a legal document under commercial law that outlines the terms and conditions of your lease. You must carefully read the lease to avoid inadvertently agreeing to unfavourable terms.
Before signing a commercial lease agreement, ensure you understand the terms and conditions. You need a lawyer specialising in commercial law to review the lease agreement, help you negotiate better terms and protect yourself from unfavourable clauses.
What Is a Lease?
A lease is an essential document under the area of commercial law that business owners should be aware of. It establishes the terms and conditions of renting a property from a landlord. In exchange for money or ‘rent’, one party (the lessor or landlord) offers another party (the lessee or tenant) the right to inhabit and use a specific parcel of property. A commercial lease is one in which the premises on the land are utilised for business purposes.
The written agreement between the parties is expressed in the commercial lease instrument. It safeguards both parties’ interests and makes the grounds of the agreement clear. Additionally, a commercial lease contract helps to reduce misunderstandings.
Types of Commercial Lease Agreements
There are many different types of commercial lease agreements, and the style you choose will depend on the specific needs of your business. The most common types of commercial leases are:
- Net lease—The tenant is responsible for paying the rent and a portion of the property taxes, insurance and maintenance costs.
- Gross lease—In a gross lease, the landlord pays for all of the property’s operating expenses, and the tenant just pays a monthly rent.
- Percent lease—With a percent lease, the tenant pays a base rent plus a percentage of their sales. This type of agreement is often used for retail businesses.
- Triple net lease—A triple net lease is similar to a net lease. Still, the tenant is responsible for paying the property’s operating expenses, including taxes, insurance and maintenance.
- Sublease agreement—A sublease agreement is used when the original tenant wants to rent out part or all of the property to another party. The actual tenant remains responsible for paying rent and complying with the terms of the lease agreement.
What Are Some of the Primary Lease Provisions That Can Be Negotiated?
When leasing a commercial property to a tenant, both parties can negotiate key provisions to best meet each party’s needs as stated under the clauses of commercial law. The following are some of the most common:
- Term of the lease—The time the tenant will use the property can be negotiated, with most leases lasting anywhere from 3 to 5 years. You can negotiate longer terms if both parties are agreeable.
- Rent amount and frequency—Both parties can also negotiate the rent amount and how it is paid (e.g., monthly, quarterly, yearly) to fit the needs of both parties.
- Renewal options—If the tenant is happy with the property and wants to continue leasing it after the initial term has ended, you can negotiate renewal options. This allows them to continue using the property for several years at a predetermined rent amount.
- Use of the property—The tenant may want to negotiate specific uses for the property not already outlined in the lease agreement. This could include using part of the property for storage or office space or having exclusive use of a particular area.
- Maintenance and repair responsibilities—The tenant may also want to negotiate who is responsible for maintaining and repairing the property during the lease term. This could fall on either party or may be split down the middle.
Things to Consider When Negotiating a Commercial Lease Agreement
When negotiating a commercial lease agreement, there are a few key things to keep in mind.
- Be sure to get everything in writing. Verbal contracts are not legally binding, so it’s essential to have a written agreement that both parties can sign.
- Read the agreement carefully before signing it. Be bold and ask questions or have a lawyer expert in commercial law review the commercial lease and look it over if you need clarification. Once you sign a lease agreement, you’re legally bound by its terms, so it’s crucial to ensure you understand everything before putting your name on the dotted line.
- Negotiate the terms of the agreement to get the best deal possible.
- Pay attention to the length of the lease agreement. Lease terms can range from a few months to several years, so choosing a term that makes sense for your business is essential.
- Keep in mind that a commercial lease agreement is a legally binding contract. This means that if you violate the terms of the agreement, you could be sued or even evicted from the property.
Do I Need A Lawyer for a Lease Agreement?
If you’re wondering whether or not you need a lawyer to review the lease agreement, the answer is maybe. Whilst having a lawyer specialising in commercial law look over your contract is not required, it may be a good idea, especially if you’re renting commercial property.
Commercial leases can be complex, and a commercial law or a commercial law firm in Sydney can help explain the contract and ensure you get what you want from the deal.
In addition, a lawyer can help negotiate the terms of the agreement on your behalf. If you’re unsure what you want or how to get it, a lawyer can be a valuable asset during the negotiation process.
A commercial lease agreement lawyer can also help with any problems with your lease agreement. For example, if the landlord tries to raise your rent or evict you without cause, a lawyer can help you fight back.
Consult a commercial lease agreement lawyer if you’re considering leasing commercial property. They can help you protect your rights and avoid any potential problems down the road.
How to Find a Lawyer to Review or Negotiate my Lease?
There are a few ways to find a commercial law firm in Sydney to review or negotiate your lease in Australia. You can ask family and friends for recommendations, search online or contact your local legal aid office.
When you find one, ask about their experience with leasing agreements and whether they have any specialties in this area. You should also ask about their fees and whether they offer a free initial consultation.
Once you’ve found a lawyer you’re comfortable with, explain your situation and ask for their advice on how to proceed. Be sure to get everything in writing so that you have a record of what was discussed.
If you’re still unsure where to look, Madison Marcus is a commercial law firm that can help you with your commercial lease agreements. We have the expertise and knowledge in commercial law to solve your legal needs. For all enquiries, contact us here.