What is covered under a commercial lease, and how can a commercial real estate conveyancer help?
Chances are, if you’re reading this you’re considering entering into a commercial lease – a legal document covering the rights and responsibilities of a tenant and a landlord of business premises. Every Australian business needs to operate under such a lease, whether that be a retail shop or a shopping centre, a café or an office, an industrial facility or a sports centre.
So, what exactly is a commercial lease?
A commercial lease covers all the details of the respective premises owned by a landlord (or lessor) that is leased out to a third party (the tenant or lessee) who will occupy the property. It outlines in detail the rights of each party, as well as their obligations towards the premises and each other, and the protections offered to each regarding the commercial transaction.
What is covered under a commercial lease?
A commercial lease is a legal contract covering all the important areas concerning the use and occupation of the business premises. These include:
- The length of time the lease will operate for
- The amount of rent to be paid by the tenant for the use of the property, and when and how the rent is to be paid
- Everything that will be expected of the tenant while they occupy and use the commercial property
- Everything that will be expected of the landlord during the lease period
- Any further terms of the lease that both parties need to be aware of
How is a commercial lease different to a residential lease?
A commercial lease sounds rather similar to your typical residential lease – and it is, apart from a few different considerations that the tenant and landlord will need to be aware of.
- The typical length of the lease. Residential leases tend to operate from year to year and need to be renewed every year. Commercial leases, on the other hand, tend to operate for longer periods. This allows businesses to maintain consistency and continuity in their place of operation.
- Commercial leases are usually viewed as contracts between knowledgeable business people, while residential leases are not. For this reason, consumer protection laws governing residential leases are greater than those applying to commercial leases.
- Commercial leases often have longer vacancies between tenancies than residential leases.
- Commercial leases tend to be more negotiable, as the needs of each tenant are different. Terms might be more subject to change in a commercial lease in response to the unique position and requirements of each tenant.
- Incentives such as rent-free periods or cash contributions to fit outs are very common in commercial leases, as landlords look to land long-term tenants.
How can a commercial real estate conveyancer help with a commercial lease?
The differences between a commercial and residential lease mean that anyone entering into a commercial lease should gain expert legal advice. A commercial lease is a long-lasting and significant transaction to enter into, and can involve a lot of negotiables, so it’s important to get it right from the start. As well, commercial leases can be very complex, and a commercial real estate conveyancer will provide a range of essential specialised services for both tenants and landlords embarking on a commercial lease agreement.
A commercial real estate conveyancer will ensure the rights of both parties are protected and not exploited, and will help both parties understand their legal responsibilities. They will provide advice on all issues relating to the terms of a commercial lease, and give each party certainty about the terms used. Not only will this ensure that your rights are protected, and your interests maximised, it will also minimise the stress involved in the process of commercial leasing.
To talk to someone about any aspect of commercial leasing, contact GM Law’s expert real estate conveyancers here.