Commercial Leases

Things seem to be going well in Sydney, where it was recently reported that there is a battle looming over prime office space in the business district. The result is a building boom across the city, which has seen both office space and ground floor retail space undergo extensive upgrading. Furthermore, there is also a vast number of residential apartment blocks currently being considered by the planning authorities and significant investment being made in local infrastructure.

This explosion in the upgrading of commercial property and the promise of a local customer base has attracted a number of businesses in the fashion, technology and food sectors, who are looking to take up residence in the area. While there may indeed be many financial benefits to be reaped in the future by these businesses, one of their primary concerns will be to negotiate a competitive lease for premises from which to trade from in the Sydney area.

At Szabo & Associates, we understand that leasing premises for a business can be a tricky process for business owners. We provide a wide range of business law services to business owners in Sydney and throughout NSW.

What is a Commercial Lease?

It is important to keep in mind that a Lease, when signed, is a legal document. It sets out what you and the landlord have agreed in terms of your use of their premises. This is why it is so important to ensure that the terms of the Lease that are ultimately signed are mutually acceptable to both you and your landlord.

What is included in a Lease?

Generally speaking, it is entirely up to the negotiating parties, the landlord and tenant, to decide what to include in the Lease. However, there are a number of aspects to what is an agreement for the commercial use of property that should always be put into the document:

 Tenant Rights

It may seem obvious but a Lease is the only evidence of any agreement between the parties on what a tenant may do with a property. This should cover the use of signage, access to car parks and the use of facilities on the premises, e.g. rest rooms. If a tenant hopes to use the property for some purpose that is not included in the Lease, then this will warrant the landlord’s permission. This may involve time being wasted and money being lost, putting unnecessary pressure on both parties. It is advisable for the parties to be in complete agreement as to what can and cannot be done on the premises during the life of the Lease.

Fixtures and Fittings

A common concern for both landlord and tenant will be the cost of fitting out a premises for commercial use. It is incredibly important that the parties agree what the condition of the property is before the tenant enters the premises, and how it is to be left on expiry of the Lease.

Length of the Lease

Another common mistake in the negotiation of a Lease is that parties fail to specify in writing what the length of the Lease will be. This is important for tenants who will hope to have enough time to build their business and see it thrive, and for landlords who will look for a steady stream of income from rent for the foreseeable future. It is also advisable to give some consideration to the option of renewal in the lease, depending on the circumstances. Any lacking in clarity could have significant consequences for the relationship between the parties, and could result in unnecessary and costly litigation.

Costs

This is arguably the most important part of a Lease. The document should normally set out what the monthly rent of the premises should be, and when/how rent will be reviewed. The figure that is ultimately agreed should normally follow a degree of discussion and, if necessary, negotiation between the parties. Tenants should consider whether or not they will be able to meet the cost of the rent that is agreed, and landlords should be satisfied that this will be the case.

Another important cost that should be clearly identified in the Lease relates to the responsibility for insurance. This relates to not only the premises itself, but also public liability given that it is a commercial premises. The parties should agree who will be responsible for this, lest they become embroiled in an unnecessary dispute at a later date following an accident or other incident on the premises.

The terms of a Lease are incredibly important. As mentioned earlier, a Lease is a legal document, and should make very clear what the rights and responsibilities of a landlord and tenant are to be. It is not uncommon that parties often look to use a template Lease to form the basis of their negotiations, however it is not advised that parties use template documents to create a Lease: these documents may not cover every eventuality, which could result in parties being in dispute and having to engage in litigation. Prospective landlords and tenants would be wise to approach an experienced property solicitor who may negotiate and draft the terms of a Lease on their behalf.  This will ensure clarity in drafting, and that what is ultimately signed reflects the interests of both parties.

Contact Szabo & Associates Commercial Lease Solicitors in Sydney NSW

At Szabo & Associates, we have many years of experiencing advising on all manner of property law matters. Our team of specialist solicitors are very familiar with negotiating and drafting the terms of a Commercial Lease. We appreciate that the prospect of having to engage in negotiations can be a very off-putting. Our team will be able to handle every aspect of your transaction, including negotiating the terms of a Lease on your behalf and advising you on their meaning. If you have any questions about entering into a Commercial Lease, please contact us. Call us on (02) 9281-5088 or fill in the contact form to the right of this page.

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