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A good lease is one that works for both you and the landlord. Here is a guide outlining how to get one.
As most commercial lease terms and conditions are negotiable, particularly in a competitive market, the tenant should discuss the following points with the landlord at the earliest possible time. They are not exhaustive and before finalising any lease, a complete review of the heads of agreement and the lease should be done.
Normally a landlord makes no warranty about the air conditioning’s suitably or adequacy for use. Therefore, make sure the tenant knows:
Unless the lease says or indicates to the contrary, the normal commercial lease provides that the tenant will continue to be liable to the owner on an assignment of lease, including under any option. Therefore, try and ensure that if the lease is assigned, the tenant gets a release of its future obligations under the lease. [If the lease is a retail lease, Section 41A gives the tenant the opportunity to get a release on assignment.]
Make sure that the services to the premises are adequate for the tenant’s proposed needs – eg is the power supply adequate. Upgrades to existing services can be costly and sometimes cost prohibitive.
Normally the lease requires the tenant to pay the landlord’s costs and disbursements including stamp duty. See if you can, negotiate out of this. However, if the lease is a retail lease, the Retail Leases Act does not allow a landlord to recover costs for the preparation of the lease.
The finishes of a shop front or premises interior will often have to be repainted etc on a regular basis. If a tenant does not want this, make sure it is a condition of the negotiations.
Make sure that the permitted use rights under the lease are sufficiently broad enough and if appropriate, exclusive use rights are granted.
Usually, the landlord makes no warranty that the particular use is permitted under the relevant zoning laws. Therefore, the agreement to lease the premises may need to be conditional on council consent etc.
It cannot be assumed that the proposed use is permitted within the zoning restrictions of the Council. Therefore, the tenant needs to be satisfied about this and not enter into possession without sorting this out.
Ask the landlord to agree to add clauses to the lease to the effect that the landlord must:
maintain and repair in proper working order any hot water service, any other fixture not
being a fixture of the tenant, all electrical fittings and wirings and all plumbing
keep the premises weatherproof
clean the exterior windows of the landlord’s Building on a regular basis
If these are not specifically in the lease, the landlord may not have these obligations at all.
Be careful of heads of agreement that agents often have a prospective tenant sign. Make sure that they are not binding until formal leases are signed. That of course is a two edged sword.
Sydney Business lawyers suggests that the heads of agreement be reviewed by it before it is signed off. Even if it is not binding, it may be too late to try and change things later.