It is vital to always get your commercial lease in writing.
It may seem like a basic or obvious statement, however, in commercial practice, it is not uncommon to hear stories about a landlord who leased out their shop, warehouse or building to a tenant without a proper written lease in place.
We recently had a client come to us for help as they entered into a verbal commercial lease agreement, which went south very quickly. Their tenant was in rent arrears and refusing to pay certain outgoings.
Unfortunately, as the client had failed to produce a written commercial lease prior to the tenancy, there were limited recovery options. In addition, the tenant had swiftly moved out before a formal lease could be drawn up and refused to pay the rent arrears, as the “price” was never agreed upon.
This case is a perfect example of why a written commercial lease is a must have! The failure to prepare a written lease cost the client over $11,000. This could have been prevented with a written commercial lease, with an initial outlay of roughly 10% of that cost.
The motto of this story, get your next commercial lease prepared by an experienced commercial lawyer prior to the lease term. Once that step is taken – we can ensure your lease contains the best terms and conditions for you.
Some crucial terms that should be included within your next Commercial lease are:
Term of lease
Payment frequency and the method of payment
Rent review parameters
Option to renew the lease (optional term)
The exact permitted use of the leased premises
Responsibility for the property outgoings rates, insurance etc
Mandatory insurance requirements for Landlords and Tenants.
End of lease obligations and repair obligations
Cash bond or bank guarantee as security for damage or non-payment of rent
In addition, we recommend including an indemnity clause. This clause determines that the tenant agrees to release the landlord from any claims from someone entering the premises while it is being leased. This is clause is ordinarily covered by the tenant’s public liability insurance.
📲 Feel free to contact Hatzis Lawyers for further information on conveyancing matters.
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