When we review your lease every clause of the lease is read. It is impossible to know what terms are included in the lease without a full review. We give you a summary of the basic terms. But we suggest that you look at the matters below.
We have organised the investigation into two columns:
|General Drafting||Is the lease designed to take advantages over the tenant?
Are the clauses slippery and difficult to understand?
|Who is the tenant?||Is the leasing entity the most suitable entity?
If a company enters into a lease then a personal guarantee may be required however a company will bring with it some limited liability. This may be helpful.
|What kind of property is being leased?||If the property is part of a body corporate then there are body corporate rules that you need to check|
|Rent||Check to see that rent correct.
Check that the clauses which adjust rent each year are correct.
Is there a market review of rent.
|Rent Incentive|| Is there a rent free period?
Is it also an outgoings free period?
How does the rent free period work?
|Dates of Commencement and Termination||Are these correct?|
|Option for a further Term||Is there an option for a further term?
What is the rental for the first year of the new term?
How is the option exercised?
What are the risk of losing the option?
|Assignment of the lease/Sale of Business||What is the process to assign the lease?
Are you still liable for the lease after assignment?
What is the process to get the benefit of any statutory release from continuing liability?
|Outgoings||What is the estimate of outgoings?
Can the outgoings be limited to an exhaustive list?
What is the risk of outgoings increasing?
|Use Rights||Is the permitted use acceptable?
You should get town planning advice to ensure that that permitted use is allowed by council in that location
|General Obligations||Which clause sets these out? Review|
|Cost||What kinds of costs may you have to pay in addition to rental:
· Surveyors and Plans
· Consents from the landlord
· Approvals of fitouts
|Trading Hours||Are hours restricted?
Are there additional costs to operate outside of the restricted hours?
|Maintenance Costs||Does the maintenance requirement reflect the condition of the property?
Has the tenant made a photographic record of the premises at commencement?
What kind of maintenance is the tenant required to undertake
Can the tenant be obliged to pay for structural repairs?
This can sometimes be a complicated and misleading clause.
|Redecoration||Are you required to decorate?
If so when?
What kinds of things are you required to do?
|Indemnities||An indemnity can make you liable for anything that goes wrong for any reason even if it is not your fault. This is common.
The only protection is insurance. The insurer should be given a copy of the indemnity and insurance clauses.
|Bond||Is a bond payable?
How do you get the bond back or released?
Is the bond kept by the landlord for a period of time after the lease ends?
|Airconditioning||What are the repair and maintenance obligations?|
|Signage||What is the process for approval?
What signage is allowed?
|Make good Obligations||Consider the likely cost of stripping the premises back to bear concrete or replacing paint and coverings. How will this work?|
|Damage to the Building||Make sure you have insurance if you cannot trade. Are you released from the lease if you can no longer trade or are you forced to take up occupation when the building is repaired. Is your insurance sufficient?|
|Special or unusual conditions||What other requirements obligations or rights are included|