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Would you want to lease a commercial property? Below is a comprehensive guide on the various considerations to make when evaluating the terms of a commercial lease.
It is one of the most important conditions of the commercial lease contract. Some of your concerns should include;
Some property owners may ask you to pay a deposit followed by monthly or annual payments. This amount is refundable at the end of the lease period. It can be used to conduct repairs or cater for your rent if you default on payments.
2. Extra Costs
Other than rent and deposit, what additional costs will you incur? For instance, you may need to pay for service charges such as water, electricity, and property maintenance fees. Are you obligated to repair the property? The landlord may ask you to conduct specific repairs, all repairs or no repairs at all.
3. Rent-Free Period
The rent-free period is an incentive that property owners give to tenants to encourage them to rent or lease the property. Typically, the landlord will not charge rent for two or three months. It allows you to conduct renovations and get your house in order.
Over time, you may need to diversify or change your business. For instance, you may have initially leased the premises as office space. However, you may opt to open a restaurant or shop if your former business is no longer profitable. Check the terms of the lease to determine restrictions on what businesses you can operate. Inquire if you can sub-lease the property to other people. Protect your business by ensuring the contract has a competition clause. It ensures the landlord cannot lease the property to someone that wants to open a similar business.
Termination of Contract
Examine the terms of contract termination. For instance, you may be bound to honour the terms of the contract for the stipulated period regardless of changing business environment. The contract should have a break clause that allows you to terminate the agreement. However, you must notify the landlord.
The lease contract may contain legal jargon that may be difficult to understand. As such, hire a conveyancer to guide you through the process. The conveyancer will ensure the contract protects your interests and that it does not expose you to future financial and legal liabilities. For long-term leases, he or she will ask for a property inspection to ensure the property is habitable.
When examining a commercial lease, check the payment terms, approved property uses, termination of the contract clause. Preferably, work with an experienced conveyancer.Share