Commercial leases are legally binding contracts that exist between a landlord and a tenant that’s occupying a property for business purposes. The lease establishes the rights of both parties in entering into the agreement, as well as what is expected. There are also costs that come with commercial lease agreements, so it’s important to consider all the factors before signing the lease. This piece answers the question of who pays for the legal fees associated with commercial leases.
What costs are associated with a commercial lease?
Professional legal advice is strongly recommended when setting up a commercial lease, as this ensures no important terms are missed and all the information included is correct. This could incur legal costs from a wide range of sources, including chartered surveyors, advisers, letting agents and solicitors. Actions of commercial property solicitors may consist of:
- Acting on the Licence to assign a commercial lease.
- Acting on the Grant of a Commercial Lease to a new tenant.
- Organising the renewal of a commercial lease.
- Instructing survey reports of the building.
At Toomey Legal, we offer fixed fee services so our clients know exactly how much they are paying for legal support in areas such as commercial property leases. For insights into how to draw up this kind of lease, read ‘What terms are commonly used in a commercial property lease?’.
How much does a commercial lease cost?
Commercial leases are often very lucrative for those leasing the property, although this revenue could be offset by initial costs. The exact cost of the legal fees associated with drawing up and signing a commercial lease can vary due to the factors mentioned earlier. The more complex the lease is (which is usually influenced by the size and use type of the building), the higher the costs usually are.
Oftentimes, it is the tenant who is expected to pay the legal fees of the landlord once the lease has been agreed and signed. However, this can be negotiated during the course of setting up the lease. It’s also possible for the landlord and tenant to split the costs between each other in a way they deem fair. The total cost of a commercial lease will include:
- Preparation costs – surveyors’ fees, drawing up initial lease clauses etc.
- Negotiation costs.
- Final costs such as signing.
- Stamp Duty Land Tax (SDLT). Read our ‘Complete guide to Vat on commercial property purchases’ for more tax insights.
Is a solicitor needed for a commercial lease?
There is no requirement for obtaining legal advice when creating a commercial lease as a landlord or entering into a commercial lease as a tenant. However, it is highly recommended as a solicitor will act on your behalf to help navigate the complexities of the agreement. Property legal experts then help it clear what the conditions of the lease are, meaning you can make the right decision and the process of commercial conveyancing can run smoothly.
Property solicitors with knowledge of commercial lease agreements are able to ensure the proper obligations of both landlords and tenants are included. This includes costly aspects such as maintenance and insurance, along with rental payments and land boundaries. Inaccuracies could be far more costly to both parties than the one-time legal costs associated with bringing in a team of professionals.
Need legal support renting out commercial property?
Toomey Legal are a modern firm committed to delivering services that are both honest and reliable. Our team has years of experience in both residential and commercial property leases, supporting our clients every step of the way. With fixed fee conveyancing, there are no nasty surprises when it comes to the cost of expert legal support. If you still aren’t sure, head over to our fees calculator to forecast the cost of a freehold commercial property purchase. Contact us today to get started