Leases for Business Premises are usually prepared by the Landlord’s solicitor. The lease should identify the rights and responsibilities of the respective parties. As the lease is often for a period of years it is important that both the Landlord and tenant understand the terms and conditions and that they have discussed the terms with their respective solicitors and that the terms and conditions reflect the parties intentions.

PROCEDURE WHEN YOU ARE THE TENANT

Initial Negotiations

Initial negotiations when you first find premises that are suitable for your business the letting agent or Landlord will usually request that you sign a “letter of offer” or “offer to lease”.

Before signing such letter or offer or paying any deposit contact us for legal advice to ensure that the letter or offer is suitable and reflects your intentions and is subject to a satisfactory lease being entered into or else the deposit will be refunded.

The Lease

When the Tenant has received the lease prepared by the Landlord’s solicitor the terms and conditions should be thoroughly checked and any terms and conditions in the lease which are not satisfactory should be further negotiated. We can attend to this on your behalf.

Terms and Conditions

A number of items need to be considered and in particular:

• What are the rent reviews
  
  
• Are you liable for outgoings such as the Landlord’s rates and insurance on the premises
  
  
• Is the permitted use of the premises in accordance with your business type
  
  
• Is the property correctly zoned under the Council Town Plan for the usage
  
  
• How long is the lease
  
  
• Do you have the option to renew the lease for any further term
  
  
• What are the insurance obligations
  
  
• What happens if the premises are damaged or destroyed
  
  
• What happens if you fail to pay rent
  

Can you transfer the lease to some other party in the event that you sell your business or vacate the premises?

Does the lease require the Tenant to pay the Landlord’s legal fees in relation to preparation of the lease? If the lease is a Retail Shop Lease then such costs are not payable by the Tenant but must be borne by the Landlord. In other types of lease such as for industrial premises or office space the Landlord may seek payment of costs for preparation of the lease to be paid by the Tenant.

Is the lease for a retail Shop? If the Retail Shop Leases Act applies then various other documentation is required and compliance with the Retail Shop Leases Act is essential.

Does the lease require a personal guarantee?

Does the lease require a security deposit or bank guarantee?

Protecting your interests

We can negotiate on your behalf to see fair and reasonable terms of lease.

We can advise you whether the lease reflects the commercial terms you require.

We can ensure the Landlord has clear title and advise whether a mortgagee’s consent is required.

We can check compliance with the Retail Shop Leases Act.

We can advise on associated matters such as whether there are any parking rights and also any Body Corporate responsibilities (if applicable).

Lease Execution

When all of the aforegoing matters are dealt with the lease will be signed by the Tenant and then forwarded to the Landlord for signature. Thereafter the lease will be registered at the Titles Office if registration is required.

Other matters to consider as a Tenant

If you are already leasing premises then as a Tenant we can assist you with giving the Landlord notice when it is time to renew a lease.

We can assist you when any queries arise regarding a lease condition during the continuance of your lease.

We can assist if you sell your business or otherwise wish to transfer the lease to another party.

PROCEDURE WHEN YOU ARE THE LANDLORD

Initial negotiations

Before arranging for a lease document to be prepared you should arrange for a Tenant to sign a letter of offer or offer to lease and pay a deposit. The documents presented to the Tenant for signature should set out the terms of lease which you require.

The Lease

When the Tenant has offered to take a lease of premises you should arrange for a lease to be drawn up. We can prepare the lease on your behalf.

The terms of lease to be considered are addressed in the “terms of lease” section of advice to Tenants above. In addition the lease should cover various matters which oblige the Tenant to keep the premises in good order and repair and for the Tenant to return the premises in good order upon expiry of the lease.

The lease should also give you the right to re-enter the premises in the event of the Tenant’s default and non-payment of rent.

In the event of default what rights do you have against the Tenant and what security do you have for performance of the lease by the Tenant? Are there any guarantees?

In commercial or industrial leases it may be possible to charge the Tenant for the costs of preparation of the lease. If the lease relates to Retail Shop premises the Landlord will be obliged to pay the costs for preparation of the lease.

Execution of Lease

The Tenant usually signs the lease and after the same has been signed by the Tenant it is then forwarded to the Landlord’s solicitor for execution by the Landlord.

Depending on the length of the lease and the Tenants requirements it may be necessary for the lease to be registered.

Other matters to consider as Landlord

We can assist you during the continuance of the lease with various matters including:

• If the Tenant fails to pay rent or otherwise breaches the lease we can assist with legal steps to recover monies owing or to have the Tenant remedy breaches of the lease.
  
  
• When annual rent reviews are due under the lease we can assist you with calculating the new rent and giving appropriate notice to the tenant.
  
  

In event of default by the Tenant and you need to recover possession of the premises we can assist with the legal steps associated with the same.

In the event that the Tenant seeks to sell his business or transfer for the lease we can advise you and assist you with any documentation required before such consent is given.

We can assist you with documentation required for renewal of a lease.

Conclusion

The above matters are a guide only and not intended to be exhaustive. The circumstances of each case need to be considered. Whether you are the landlord or the tenant we recommend that you seek our legal advice before you sign or agree to lease or offer to lease.

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