Using Solicitors for Commercial Property Lease Negotiations

Leasing or renting a commercial property is a major part of a business’ running costs. Therefore it is crucial that the terms and conditions agreed upon are best suited for the business.

On the whole, commercial leases are a lot less standardised than residential leases. Commercial leases are much more negotiable, so it is important that businesses do not accept property lease terms that restrict and tie a business to an unsuitable lease of premises – especially in times of a volatile economic climate.

Commercial tenants are not protected to the same extent as a residential tenants. The contract negotiated upon with the commercial tenant is binding, if all the obligations of the contract are not fulfilled then it could cause serious financial problems.

Here is a list of important points to consider when negotiating a lease:

  • Try to negotiate the longest possible rent free period in order to cover the cost of decorating the premises. This allows you time to redecorate, move in/out furniture, change carpets etc.
  • Make sure that you insist on a document from the landlord listing the current defects with the premises accompanied with photographs. You do not want to be fixing or being billed for disrepair that you are not accountable for.
  • Subsequently, make sure that you exclude your liability for any existing design defects on the premises.
  • Check with the landlord that asbestos is not present anywhere on the premises.
  • Make sure that the landlord will fully comply with the Disability Discrimination Act 1995 and will meet any costs for necessary adjustments or modifications.
  • Discuss rights for free car parking or whether credit is available against the cost of public parking.
  • Is a covenant needed to prevent any competing business from using adjoining or neighbouring premises?
  • Is the right to renew the lease adequate?
  • Be sure to negotiate tenant-only unconditional termination rights. Try to negotiate an ample period of notice, eg. 3 months notice by the tenant to the landlord.
  • Do not offer rent deposits, bank guarantees or any sort of personal guarantee unless it is absolutely necessary.
  • Question any service charges and find out and ask the landlord to explain why you have been charged for them.
  • Make sure that the Energy Performance Certificate supplied by the landlord will not be prohibitive or excessive. Negotiate a reduction in rent or service charge to make up for energy costs if they could be excessive.

This is a general list, it is not exhaustive and depending on circumstances, some points may not be relevant to all tenants. A business can benefit greatly by saving time and money when negotiating a property lease therefore legal advice from expert solicitors is crucial in order to get the best possible deal.

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