No matter the type of business or commercial venture you engage in, be it wholesale or retail shops, corporate or non-corporate offices, garages or workshops, production factories or storage facilities, you will definitely need a property to operate from. We agree that some businesses operate from their own facility, but most businesses operate from commercial properties. The fact that there is much more to a commercial lease than just the payment of rent is what prompts this article.
Interestingly, apart from the rent payable, it is standard practice for commercial leases and agreements to contain pages of detailed provisions, all of which will affect the Tenant named in the lease.
The lease, which is often drafted to protect and favor the landlord, can impose a number of burdensome obligations on Tenants, some of which may not be reasonable. In addition to the Lease itself, property legislation has a large impact on the Tenant dealing with the property.
It is therefore very important for tenants to obtain a solicitor’s advice in order to fully understand their rights and obligations before completing a Lease, and here are some of the reasons why it is necessary;
Table of Content
- Why You Need a Solicitor for a Commercial Lease
- Unveiling Hidden Conditions
- Help You Avoid Avoidable Expenditures
- A Solicitor Will Help You Define The Repair and Modification Expected of You as a Tenant
- Negotiate The Installation of Signage
- Negotiate Service Charge
- Negotiate Insurance
- Lease and Rent Review
- The Clause of Re-Assigning and Sub-Letting
- Negotiate The Break Clause
- Secure the Planning of the Facility
Why You Need a Solicitor for a Commercial Lease
If you have ever read through legal documents, you will see that there are some clauses you will not understand if you are not a legal person. Some of those clauses most often than not are drafted to your disadvantage and if you go ahead to sign the lease document, you will be bound by the terms and conditions of the lease agreement. This is why you need a solicitor before signing a commercial lease agreement. Hiring a solicitor will help you reveal many things about the property and the condition attached to the lease agreement, including whether or not the Landlord actually has the power to grant the lease or whether the property is connected to mains utilities and is free from any outstanding bills. A solicitor will also help you uncover whether the property is within the zoning area of the kind of business you want to engage in.
Help You Avoid Avoidable Expenditures
If you engage the services of a solicitor before leasing a commercial property, the solicitor will help you read through the document with the aim of identifying loopholes that will drain money from your pocket. It is normal for Tenants who have not been represented by a solicitor to sign a commercial lease agreement without first finding out the limit of their obligations under the commercial lease agreement. After the tenure of your lease agreement, if you did not properly scrutinize the terms and conditions of the lease agreement, you may be required to bear the cost of fixing all the damages done to the property. Whereas, if you make use of a solicitor before signing the lease agreement, they will help you negotiate this part of the contract to your advantage.
A Solicitor Will Help You Define The Repair and Modification Expected of You as a Tenant
Another important reason why you would need a solicitor before signing a commercial lease agreement is that they will help you define the extent of the repair and modifications that you are expected to carry out in the property. This is because a commercial lease agreement usually comes with a repairing obligation with the sole aim to keep the property in good condition after the tenant lease agreement expires. This does not necessarily mean that the property is to be kept in the same condition it was in when the Tenant entered into a lease. One of things your solicitor will do for you is to help your negotiate the repairs you are expected to carry out to your favor and the solicitor will also help you negotiate the ability for you to carry out non-structural modifications. This is important because it is often difficult for a Tenant to request and get the approval of the landlord to carry out some modifications in the facility.
Negotiate The Installation of Signage
Another reason why you need a solicitor is for the solicitor to help you negotiate to your favor the conditions of installing signage within the facility. In some cases, the landlord might be silent on this clause in the commercial lease agreement and when you try to install one, they will kick against it which is why you must clear the air as regards the installation of signage before signing the commercial lease agreement. What is the use of leasing a commercial property without installing signage?
Negotiate Service Charge
In some cases, the landlord of the facility might still be occupying a part of the facility and in such cases, the landlord may want to lump the service charge of the facility on you why they contribute nothing. The total service charges of the facility might not be revealed to you, but with the help of a solicitor, you can easily get this information and then request for only the percentage that is due you rather than paying for the whole building.
Another important reason why you would need a solicitor is to ensure that the lease provides for the Landlord to insure the building to its full reinstatement value with an obligation on the Landlord to carry out any reinstatement following damage or destruction by an insured risk. The solicitor will also look for an obligation on the Landlord that in the event of such damage or destruction, the rent and any service charge is suspended pending reinstatement.
Lease and Rent Review
No matter the type of rent or commercial lease agreement you are signing, there ought to be a rent review. As someone who is not experienced in this regard, you would need a solicitor to help you negotiate the lease and rent review to your advantage. Your solicitor will make sure they negotiate these provisions so that as Tenant, you will have a right to negotiate the revised rent with the Landlord or, in the event of the revised rent not being agreed, the rent is determined by a third party, usually a surveyor.
The Clause of Re-Assigning and Sub-Letting
In business, there might arise a situation that will force you to operate far less than the capacity you paid for. When you are confronted with such situation, one of the ways of recouping your money back is to re-assign or sub-let a part of the facility you leased. Trust me, most landlord would not want this in their property, but with a good solicitor, this clause can be negotiated to your advantage. Part of the job of the solicitor is to make sure the lease agreement contains the requisite provisions to enable you to do this without resistance from the landlord.
Negotiate The Break Clause
Part of what a solicitor can do for your when you are leasing a commercial property is to help you with the break clause of the agreement. The solicitor will also make sure that any conditions to exercise the break clause, in the lease, are acceptable to you. This important because in most commercial lease agreements and of course from a Tenant point of view, it is to their advantage that a break clause is inserted in the commercial lease agreement. The essence of a break clause is to allow you the flexibility to determine the lease, at any time on a few months’ notice or on a fixed date during the lease term, provided that the notice is given.
Secure the Planning of the Facility
Lastly, it is one thing to see a fanciful commercial property put up for lease and it is another thing to get access to the plan or history of the facility. Part of the job of the solicitor is to help you see the original plan of the building and to advise you on planning so that the premises have the requisite planning that you will need to run your business.
If you are considering going into a lease for a commercial premises, you are strongly advised to seek advice from a solicitor. A solicitor will ensure that you will be adequately protected. Besides, if a tenant goes ahead to sign a commercial lease agreement without the services of a solicitor, they will always fall to the antics of the landlord.