As the expression suggests, a commercial lease refers to the lease of commercial property. This includes office space, industrial units, workshops and warehouses, retail shops (whether they are within a shopping centre or not), storage sheds, working yards and other non-residential property.
If you are planning on leasing one of these properties (whether as landlord or tenant) you will need to involve a lawyer to make sure the commercial lease terms are suitable to your proposed use of the premises.
What terms and conditions are included in a commercial lease?
With the exception of retail shop leases (which, like residential leases, are highly regulated by legislation to provide some basic protections for tenants from the heavy handedness of some landlords), the terms and conditions that will apply to your commercial lease are typically the subject of negotiation between landlord and tenant.
Typical terms and conditions cover:
the period of the lease and whether there are any options for renewal;
rent, outgoings and the rent review mechanisms (such as CPI increases, fixed percentage increases and market reviews);
responsibility for maintenance, repairs and structural works;
the tenant’s scope to carry out works on the premises to suit its requirements;
circumstances in which the landlord may access the premises;
the process for dealing with tenant breaches as well as grounds for termination of the commercial lease;
restrictions on subleasing by the tenant;
the scope of the tenant’s obligation to “make good” the premises at the end of the lease term;
insurance, indemnity and liability for damage to the premises;
the rights of both parties if the landlord wants to renovate or redevelop the premises;
bank guarantees and security deposits; and
a dispute resolution mechanism.
A commercial lease lawyer will assist you to negotiate a reasonable and satisfactory outcome in relation to each of the above matters having regard to your bargaining power and the state of the rental market.
In most commercial lease arrangements the terms of the agreement are documented by the landlord’s solicitor and then provided by the landlord or real estate agent to the tenant. If you are a tenant we recommend you ask a commercial lease lawyer to review the lease for you. Your lawyer can also advise you on the reasons why you might wish to register your commercial lease with the Titles Office and assist with that process.
Turnbull Hill Lawyers has a team of experienced conveyancing lawyers who can assist you in a cost effective way with all of your commercial lease requirements.