What is a commercial property lease?
A commercial lease is a contract between a landlord and a tenant that governs the use of a commercial property, typically an office, shop, factory, warehouse, or other business premises. Commercial leases can be complex, and it is important to understand the legal implications of any lease and to identify the most suitable type of lease for your particular needs.
What are the most common mistakes tenants should avoid when leasing commercial property?
- Not understanding the lease terms. The lease is a legally binding contract, and it is important to understand all of the terms before you sign it. Leases are often long and complex, if you do not understand something, ask a qualified lawyer to explain it to you.
- Not negotiating the terms. The landlord is likely to have a standard lease that they use for all of their tenants. However, you are not obligated to accept the terms of the lease as they are written. You should negotiate the terms of the lease to make sure that they are fair and suitable for your business needs.
- Not getting everything in writing. It is important to get everything in writing, including the lease terms, the rent amount, the security deposit amount, and all applicable terms and conditions. This will protect you in case there are any disputes in the future.
- Not getting a qualified lawyer to review the lease. It is always a good idea to have an expert property lawyer review the lease before you sign it. A good lawyer can help you understand the terms of the lease and make sure that they are fair. An experienced lawyer will be able to highlight risks and opportunities too.
- Not doing your research. Before you sign a lease, it is important to do your research and understand the market value for the type of space you are looking for. This will help you negotiate a fair rental rate and terms.
- Not considering your future needs. When you are negotiating a lease, it is important to consider your future requirements. If you are planning to grow your business, you will need to make sure that the lease allows you the flexibility to do so, but also if circumstances dictate, you may need to consider the option of renting less space or a different type of space.
- Not being prepared to walk away. If you are not happy with the terms of the lease, be prepared to walk away. There are nearly always other properties available and the implications of being trapped in an unsuitable lease can be damaging and expensive.
- Not understanding the renewal terms. The lease will typically have a renewal term, which is the period of time that the tenant has the option to renew the lease. It is important to understand the renewal terms to avoid potential eviction, rent increases, or long-term lock-ins.
- Not understanding the termination terms. The lease will also have termination terms, which are the conditions under which the tenant or the landlord can end the lease. Understanding the termination terms including the notice period, any right of first refusal, and the consequences of early termination are critical.
- Not understanding the default terms. The lease will also have default terms, which are the consequences if the tenant or the landlord breaches any of the terms of the lease. These could relate to the failure to pay rent, unauthorised use of the property, non-compliance with terms, and damage to the property, etc. for example.
How 3CS can help
If you require further information or help with any aspect of a commercial property lease or any commercial property legal matter, please get in touch with your usual 3CS contact.