Entering a commercial tenancy agreement or lease is a
very significant business decision. It is a legally binding
contract that will affect the value of your business. You
need to fully understand the terms and conditions of the
agreement and what could go wrong before you make a
commitment. Therefore you should obtain legal advice
before signing.
Before you sign
The following information provides some, but by no means
all of the issues that you should consider:
•
Firstly, do you have a written agreement?
•
Are you dealing with the owner or a tenant?
•
Have you received sufficient information about the
premises, such as a disclosure statement?
•
Do you know the space available for your exclusive
use and access for your customers?
•
Do you know the duration of the lease?
•
Does the agreement have an option to renew?
• What fit out is allowed?
• Who owns and insures fixtures?
•
Is a bond/security required?
•
How often and on what basis can the rent be varied?
• Who actually pays for repairs and maintenance for
your rented area?
•
Can the lease be assigned to someone else?
• What about other outgoings?
•
Are you also paying for common areas, general
property insurance, rates, levies, advertising?
•
Can you vary your business during the term of the
lease?
•
Is there a dispute resolution clause?
•
Are the premises suitable or approved for the intended
business use?
•
Are you aware of all your obligations to the landlord?
•
Are you aware of all the landlord’s obligations to you?
The agreement will be written in the interests of the
landlord. What about your interests? The landlord may
work out rent according to floor space. You may be
interested in rent as a proportion of your turnover. Are the
two compatible or is negotiation needed?
The Retail and Commercial Leases Act 1995 specifies
obligations relating to leases over business premises
at which goods or services are sold or provided to the
public where the rent is below $250,000 per annum.