What to watch for in Leases

Traps about Leases
The following are some of the matters that could be traps in leases and you need to be aware of them.

  • If the lease has a low rent at the beginning, then this can increase sharply after the first annual review.

  • If you are leasing retail premises the Retail Shop regulations may apply to your lease. This means that you will need to be familiar with the contents of this act.

  • Once you sign the lease you will be legally bound to fulfil all the terms and conditions in that document such as paying rent and outgoings etc.

  • If you want to carry on the lease after the original term expires start negotiations early.

  • If there are any changes to the lease and the landlord makes that to you verbally, do not accept it. Make sure you obtain it in writing.

Renewing the Lease
Most leases are written to cover a particular period of occupancy. Most leases will also provide for an option to renew once the original period has expired. If you are looking at an extension of your lease make sure that the documentation does not contain any new terms or conditions which you are not happy with. Also make sure that the rent is not increased too much and if there is a rent increase, make sure that it is justified.

Once your fixed term lease has expired, if you don’t want to renew the lease but still want to carry on operating there, most leases and landlords will allow you to continue using the premises on a monthly basis. “Monthly basis” means the landlord can give you a months notice to vacate or you can give the landlord a months notice to leave if you want. If you wish to renew your lease it is advisable to contact the landlord, at least 2 months before the lease expires so that negotiations can be underway and new documentation prepared.

If the Landlord Actions affect your Business
In some cases the landlord may have to pay you compensation for any business losses or injuries suffered through using the premises.

For example, you may be entitled to compensation if the landlord:

  1. Relocates you to other premises during the term of the lease.

  2. Does something to make access to your business much more difficult.

  3. Does something that disrupts your business and fails to take steps to prevent this happening.

  4. Neglects to clean, maintain and repair the premises which is their responsibility under the lease.

  5. Fails to repair any equipment or plant which is required by the lease.

  6. Forces you to leave the premises before the lease expires because he or she wants to refurbish or make major changes.

  7. Has caused you to lease the premises as a result of information or statements that were made by the landlord that were misleading.

  8. Fails to make the premises available for trading on the nominated day according to the lease.

  9. Does something which causes customer access to your premises to be severely affected and thus also causing you loss.

If any of these things happen then you may have a case against the landlord.