What terms are in a commercial lease agreement?
If you are looking for some help in understanding all that there is to know when it comes to a commercial lease agreement, then it is an important step before you sign on the dotted line. Renting out a commercial property is something that is a big commitment, which is why the wording of contracts needs to be understood so you know exactly what you are signing up for.
What terms are in a commercial lease agreement? In a commercial lease agreement there will be lease terms to understand, as well as rights that you will have as the tenant. Not only that, but you need to know what your landlord is obliged to do as the property owner. As it is a contract, it is legally binding and so you need to be clear on the rights that you have and how long the terms are, as well as knowing that you’re allowed to do the property and what isn’t allowed. Here is a guide to help you to understand the terms in a commercial lease agreement to help you move forward.
Terms in a commercial lease agreement
- Automatic renewal: as the name suggests, unless you do otherwise, within a specific time period of notice, the lease will continue indefinitely. This can be helpful when you’re looking for a long-term rental but if there are issues with the property, then you’ll need to be aware of the notice period to get out of the contract in time.
- Fixed end date: this is the date when your rental agreement ends. Nothing can be changed before that date, such as an increase in rent, unless your landlord has stated that they have the right to do so.
- Security of tenure: when your lease is up, and there is a ‘security of tenure,’ it means that you have the right as the tenant to lease the property again, on the same terms as before.
- Base rent: this is the base amount of rent that you have to pay. It will be a fixed rate, and other extras like utilities are excluded.
- Percentage lease: this is where the lease agreement will include a base rent as well as a percentage of your income each month of year. This is something that will be able to be negotiated, but it is something to be aware of.
- FRI leases: A Full Repairing and Insuring lease is where you need to cover costs such as repairs, maintenance, and insurance. This can mean a lot of additional costs to you, so you should be aware of any lease agreement talking about FRI.
- Schedule of condition: this is a term in the agreement that is all about assessing if any property damage was there before you leased the property or if it was caused by you. A schedule of conditions should be done at the start of the commercial lease.
If you are looking for expert property legal advice before commencing with a commercial lease agreement, then get in touch with Toomey Legal today. Learn more about a landlord’s responsibilities under a commercial lease here.
What is best way to break a commercial lease early?
Here we discuss, what is the best way to break a commercial lease early? Expert property legal advice from Toomey Legal.
When it comes to your business, the chances are that you might – at some point – want to move to a new office. Whether you are growing your business or downsizing and shifting people around, the size of your business might be an issue. One of the ways that you can move from your currently rented commercial premises is to break your lease. Exiting the lease early is not as easy as it sounds; it comes with some strings attached!
Firstly, it’s important to review the terms and conditions that you have in place with your current landlord. There is every chance that a conversation can really go a long way. If you have been a reliable tenant, you might find them happy to let you out of the contract and you can then break free. However, it’s not always the case so you need other suggestions to get you out of your lease that can help. Some of the options that you have in front of you include:
Using A Break Clause
If your current lease has a break clause, you can use it as a get-out from the current commercial lease you have. You might need to give a few months of notice, but it’s worth it if you can get out of your lease and move on. Check the requirements of the clause and make sure that you meet them all before you attempt to leave.
If you don’t have a break clause, the best thing that you can do is to open a conversation and negotiate working out of your current lease. You can then talk through any liabilities and have a clean break from your landlord. You have to get some professional advice for this to work, however, and the best thing that you can do is speak to one of our experts. It could cost you a large financial outlay if you want to surrender your lease early and minimising these costs is important.
Costs Of Early Exit
Not only do you potentially pay for the early exit fees of the lease termination, you then have to pay for legal advice, advice from a solicitor and from a conveyancer. The longer the deal takes to work out, the more costly it will be. When the reason behind the break lease is that your financial situation is dire, you might be able to get out of the contract with proof that you can’t afford it.
Contact Toomey Legal
If you know what your current notice period is, you can talk to Toomey Legal today and we can assist you with negotiating a deal with your current landlord. Breaking a commercial lease early can be as smooth as possible, but only when you pick up the right advice. With Toomey Legal, you get support every step of the way when you are trying to break a commercial lease.
You may not need to end the lease if you can transfer the lease to someone else. An assignment or underletting of the property may be a better option. Talk to us to discuss