Understanding and negotiating a fair commercial lease can have a significant impact on the success of your business. In this article, Melbourne Law Studio has put together a list of some of the essential items that should be included on a commercial lease so you can start your business on the right foot.
The landlord must provide all the documents which are legally required by the Retail Leases Act 2003:
The landlord should disclose whether they have a mortgage on the premises and if the lending authority has given approval for the lease.
Your commercial lease must outline the duration of the lease and whether you have the option to renew. You are entitled to at least a 5 year lease according to section 21 of the Retail Leases Act 2003. This includes the initial term as well as any further term or terms provided for through options for renewal.
A commercial lease may specify specific terms for periodic payments and should outline who will pay for specific outgoings such as rates, taxes, insurance, contents insurance and water rates. These can be determined during the negotiation process with assistance from a commercial lease lawyer. Tenants are not responsible for the landlord's legal costs, but there could be other lease set-up costs you should enquire about.
Responsibilities for the building and any fittings, fixtures and equipment are often shared between landlord and tenant. The commercial lease agreement should make this clear.
Determine whether there are permits, registrations or other licences which could affect lease negotiations. For example, if your business set-up depends on getting a planning permit or a liquor licence, a commercial lease agreement should refer to this. If you have doubts or any questions about how these may affect your business, get advice from an experienced lease agreement lawyer.
If the lease has a Permitted Use clause outlining how the premises can be used, ensure it doesn’t affect your operations or stop you from any future development. A lease agreement lawyer can help clarify the potential impact of such clauses. If you may need to sell the business at some point, a Right of Assignment clause provides the option of transferring the lease to a new tenant.
For a commercial lawyer Melbourne and Victoria based businesses can count on, visit the team at Melbourne Law Studio. We can help interpret, advise on and negotiate commercial leases. Call us today on 03 9021 1421 or contact us online.
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