2 min read
12 Nov 2021
YES, you definitely need an experienced commercial leasing lawyer to help you with a commercial lease agreement. You should also get a lease lawyer to help with the letter of offer, heads of agreement and review of any lease and lease disclosure statement before you sign.
Many smaller business owners think that they can go it alone on leasing. Our strongest advice is that it is very unwise.
Commercial leases are prepared by the Leasing Agent or the Landlord’s Lawyer. Fundamentally it is a lease to protect the landlord’s interests firstly and foremostly. Special conditions and certain clauses may be detrimental to your position.
If you are a landlord. you will want to protect your position by having your documentation well prepared to be protected from common issues. The lease has a direct impact on the value of your premises.
Commercial property leases are legally binding agreements. Even before you sign a lease, the letter of offer or heads of agreement may constitute a legally binding agreement.
Commonly issues arise – not always at the beginning of a lease, but often during or at the end of a lease. Some tenants may even find themselves suddenly without business premises if their lease is not carefully considered.
Commercial leasing lawyers will check the special conditions and terms of the heads of agreement, lease and any lease disclosure statement. Firstly, our lawyers will ascertain that the lease is fit for your purposes and whether it contains any unfair lease terms.
Understanding the lease and the obligations you have as a tenant is important. If you have a clear, concise understanding you will make more informed decisions during the negotiation stage. This can set up the landlord tenant relationship on the right note and help to prevent disputes arising.
There are two main types of commercial leases: retail leases and commercial leases. Determining the type of lease you are entering is the right lease is fundamental.
Retail leases differ from commercial leases in that there are more protections and the process and tenants’ and landlords’ obligations are clearly defined by law under the Retail leases Act 2003 (the Act). There can be issues if you enter into the wrong type of lease.
There are clear defining features of what constitutes a retail lease that a commercial lease lawyer will be able to advise you on. The outgoings and other rights are greatly affected if you sign the wrong type of lease. You don’t have to be a retail shop to necessarily qualify as a retail business.
We also look to ensure your rights to deal with the lease are not limited in matters such as assignments and subleasing etc.
The financial exposure with security deposits, bank guarantees and/or personal guarantees will also affect a tenant’s position greatly. We look to limit our tenant client’s potential for loss when providing advice.
Special Conditions, Guarantees, Options, incentives, rent reviews, market reviews, valuations…
Commercial leasing has many different aspects such as options to renew your lease, incentives and conditions that can directly impact the value of the premises or your position. Many of these items determine the difference between a good deal and a great deal.
They typically don’t have an initial impact on the lease, but they do impact ongoing costs and the operation of the lease. When it comes time to enforce your rights under the lease you want to make sure the agreement is clear and enforceable. For a retail lease, it is important to note that any term that contravenes the Act may be rendered void and unenforceable at law.
For both the tenant and the landlord having the terms and conditions clearly defined in the lease is important.
Often poor or ambiguous drafting leads to disputes later. Lease advice is a pre-emptive and protective measure to avoid nasty lease disputes.
Special conditions can be drafted to ensure that the parties are protected and the final agreement reflects the entire agreement between the parties.
If you are a landlord, we will assist from the outset and can prepare documentation so that it can be presented to any prospective tenants.
Heads of Agreements can be legally binding. Before you sign anything it is wise to get legal advice. Starting off on the right foot is important to securing the best deal and setting the right tone.
Experienced leasing lawyers will be able to quickly guide you as to what is standard and what to look out for. Having a representative working for you to protect your interests is crucial to you getting the best outcome.
If you are a tenant, it is important to remember the agent works for the landlord. Lawyers will review the lease terms and conditions with a view to making sure that the agreement protects you and does not unfairly favour or protect the landlord.
It is often the case that the lease prepared is different from the Heads of Agreement or what is initially discussed. An astute commercial lease lawyer will check to ensure that the deal you struck initially is not diminished in the final version of the commercial lease.
Commercial premises are fundamental to the operation of a business. For most tenants their business is their main source of income. Having a lease that is well considered and tailored for your business is important to the future functioning and viability of your business.
There are financial risks associated with signing a commercial lease that does not allow you to operate your business as you wish or provide certainty for the future.
Having clarity as to how the lease will operate in reality and your obligations under it will help the relationship between the parties. It is important to remember at the lease negotiation stage all parties are typically on their best behaviour. This is mostly not the case when a dispute arises.
Commercial leasing disputes are costly for business owners and landlords. You may save a few hundred dollars for review of the lease at commencement but if a dispute arises it may cost you thousands of dollars to rectify the issue. Avoiding issues by getting advice on a lease, disclosure statements and other commercial property lease documents at the outset is key. We can provide expert legal advice on leasing disputes and with our extensive litigation experience can help you avoid future disputes.
Our commercial lease lawyers have a deep understanding of what is standard commercial practice and what isn’t. We have helped many clients with their retail and commercial leases, agreements, licences and heads of agreements.
Having this intrinsic understanding of the commercial aspects of leasing can assist greatly when negotiating a commercial lease.
At PCL Lawyers, our law firm provides a wide range of legal services to businesses and individuals and can assist with businesses end to end legal needs.
Our commercial leasing lawyers have extensive experience in advising on commercial and retail leases and resolving lease disputes.
Contact us today and speak to a lawyer about how we can assist you with your commercial lease on 1300 900 307 or complete and enquiry form and we will contact you.
Disclaimer: This article has been prepared for general information purposes and may not apply to your situation. This information should not be relied upon for legal, tax or accounting advice. Your individual circumstances will alter any legal advice given. The views expressed may not reflect the opinions, views or values of PCL Lawyers and belong solely to the author of the content. © PCL Lawyers Pty Ltd.
If you require legal advice specific to your situation please speak to one of our team members today.
Marilyn Wai is a Senior Associate in the Commercial and Commercial Property Department. Marilyn studied law at Monash University and obtained a Bachelor of Laws and was admitted into practice in...
You want to know that you are getting advice and real solutions. You not only want a lawyer who has strong experience and knowledge in legal matters, but a lawyer who can also navigate you through the commercial realities.Request a meeting