Commercial Leasing

A commercial lease is a legally binding agreement between a landlord and a tenant for the use of a commercial property. This agreement outlines the terms and conditions of the rental arrangement, including the length of the lease, the rent amount, and the responsibilities of both parties. Given the complexity and long-term nature of commercial leases, which can often span several years, it is crucial to thoroughly understand the lease agreement before signing. This understanding can help prevent future disputes and ensure that the lease terms align with your business needs.

Yes, having a lawyer review your commercial or retail lease is a smart move, especially for complex or long-term agreements. With extensive expertise in both commercial and retail leasing, a lawyer can guide you through the entire leasing process, from the initial lease inception to the exit, while assisting you to effectively managing any issues that may arise. A lawyer can spot hidden fees, help you negotiate better terms, ensure zoning compliance, and provide you with advice which may protect you from legal risks. While it may cost some money upfront, it can save you from costly disputes later. Contact MV Law for help with commercial lease agreements.

Commercial or retail leases are used for business and retail premises. Commercial leases typically involve longer lease terms, higher levels of negotiation, and greater responsibility on the tenant for things such as paying outgoings and maintaining the premises. Residential leases are for premises which are to be used as a home. Residential lease generally have shorter terms and are required to include standard terms.

A commercial lease typically includes several key clauses that outline the rights and responsibilities of both the landlord and the tenant:

• Rent and Payment Terms: Specifies the amount of rent, payment schedule, and any rent escalation clauses.
• Length of the Lease: Defines the duration of the lease and any renewal options.
• Use of the Property: Details the permitted uses of the property and any restrictions.
• Maintenance and Repair Responsibilities: Outlines who is responsible for maintaining and repairing the property.
• Insurance and Liability: Specifies the insurance requirements and liability responsibilities of both parties.
• Termination and Renewal Options: Details the conditions under which the lease can be terminated or renewed.

Understanding these key clauses is essential for ensuring that the lease agreement meets your business needs and protects your interests.

Yes, you can negotiate the terms of a commercial lease. The best chance to do this is when you are initially discussing the terms with the landlord or the agent, before you sign the heads of agreement or lease proposal. If the relevant leases legislation applies then there are some provisions which must be consistent with the legislation. However, generally these do not relate to the commercial terms of the lease and are often for the benefit of the tenant.

Breaking a commercial lease early can lead to significant financial penalties and legal consequences. Generally, tenants are liable for the rent and other costs under the lease for the whole of the term. If you break your lease early, the landlord may be entitled to recover rent from you until it finds a new tenant as well as its legal costs and the costs of re-leasing the property. Landlords do have a duty to mitigate their losses by taking reasonable steps to find a new tenant. MV Law can provide you with advice regarding whether you have a right to break the lease early and if not, some options for negotiating with the landlord.

We recommend considering the following before signing a commercial lease:

• Have you undertaken due diligence regarding the Premises to ensure that it suitable for your needs?
• Do you have the financial capacity to meet the obligations under the lease?
• Do you understand your rights and obligations under the lease?
• Do you have your insurance ready for the Premises?
• Do you have your bond or bank guarantee, if required, ready?

We recommend seeking legal and financial advice regarding the lease before signing it to ensure you have covered all of the above.

The first step is to consider what the lease says about breaches of the terms. Usually there is a requirement for you to give the other party notice of the breach and an opportunity to remedy before you can take any further legal action. You will also need to consider if there is any relevant legislation which requires notices to be in a particular form. If the breach is not remedied after the notice, then the legal action you take will depend on what outcome you would like. This may include legal action to require the other party to take certain action, or to terminate the lease, or to seek compensation for loss you have suffered. We recommend that you seek legal advice early in the process to ensure that you have followed all of the required steps correctly.