Commercial Leases - Landlord/Tenant Responsibilities

Does anyone have links or information to rules / regulations / ettiquette regarding commercial leases. Specifically i am looking for the standard lease agreement between a landlord and tenant and a list of responsibilities of what the landlord should be expected to do in regard to the setup / fitout / painting of the premise inside and out.

jersey10 said:

Does anyone have links or information to rules / regulations / ettiquette regarding commercial leases. Specifically i am looking for the standard lease agreement between a landlord and tenant and a list of responsibilities of what the landlord should be expected to do in regard to the setup / fitout / painting of the premise inside and out.

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I can mention a few things.

You will be presented with a lease to sign by the agent, which will contain various clauses, standard or not.

In the instance of the last lease I entered into, I did some preliminary negotiation, then took it to my solicitor to squeeze the best deal.

He ended up saving me quite a few $ per year, well worth his extravagant fee.

Remember the agent works for the other bloke, so unless you have experience with commercial lease, you could get felt up.

everything should be negotiable

Thanks AWG. With respect to your tenancy, if the building required work inside or outside (e.g. painting, walls being removed / added, air conditioner being installed, etc.) would you expect to pay for that or would you expect the landlord to pay for it?

jersey10 said:

Thanks AWG. With respect to your tenancy, if the building required work inside or outside (e.g. painting, walls being removed / added, air conditioner being installed, etc.) would you expect to pay for that or would you expect the landlord to pay for it?

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I am not an expert and have a only done a few.

I negotiated all the things you mentioned.

My understanding is the "standard" commercial lease, would have you pay most, if not all of the above.

There would often also be a "make good" clause, which means you are responsible for returning the building the way you got it !

Essentially, what I put to the owner, via my solicitor and their agent, is we would go halves in "improvements" like painting and carpet. (he reluctantly agreed..+ cost and other concessions)

Any initial or regular repairs at landlord cost ( normal)

Changes/Fitouts normally would be your cost, unless it would suit the landlord...ie improvement

depends how much they want to rent it out..ie vacancy rates/time..and your negotiating skill !!

They can and will try to charge you for all sort of things like rates, various insurance, security etc

I dont think I would sign a commercial lease without my solicitor look at it

jersey10 said:

Does anyone have links or information to rules / regulations / ettiquette regarding commercial leases. Specifically i am looking for the standard lease agreement between a landlord and tenant and a list of responsibilities of what the landlord should be expected to do in regard to the setup / fitout / painting of the premise inside and out.

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Essential your lease is your business, a good lease can make a good business become better and visa versa, so find a good solicitor, and please do not sign anything until you understand everything in that lease, and remember when first you sign you are in the hands of your landlord, also do NOT put your house up as security, in worst case scenario, your landlord will take your house.

Do a search for closed businesses due to lease problems. It is educational. See a solicitor.
Residential leases are different to commercial.

Hi

My first post in the forums but thought I could add to the discussion since I work in commercial property and have reviewed some leases - not an expert per se. Just my and you can find out some more info through Google too.

To break it down, you'd usually have Triple Net, Net, Gross, Modified Gross and Gross Plus/Base leases.

If you are the tenant, then a Gross lease would be ideal. The landlord will pay for everything - however your rent will probably be higher since the landlord will want to make up for it so that might be the most important component.

Modified gross leases is similar to gross except certain items are payable by tenant; say, energy charges from separate meters.

Gross plus/base leases involve the tenant paying for operating expenses over a set base amount.

Triple Net will have the tenant pay for everything - including capital/structural repair expenses to the premises.

Net leases involve the tenant paying for operating expenses i.e. repairs, utilities etc. but not capital expenses.

Depending on how well you negotiate, and as already pointed out by others, the landlord can give you incentives by paying for your initial fit-outs, or even give rent-free periods or concessions. You might also want to pay attention to your rent-reviews - especially if they are market reviews and ratcheted to never go down.

Also mentioned are make good clauses which is pretty standard. You can also negotiate for your fit-outs to transfer to landlord's ownership. Depends on what you want. Definitely run through the whole thing with a solicitor before finalising.

jersey10 said:

Does anyone have links or information to rules / regulations / ettiquette regarding commercial leases. Specifically i am looking for the standard lease agreement between a landlord and tenant and a list of responsibilities of what the landlord should be expected to do in regard to the setup / fitout / painting of the premise inside and out.

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Fit out is generally the tennents responsibility.
He pays everything including rates.
You can write what ever you like in a commercial contract.
I find it a negotiation between parties.
Ive seen them written by letting agents and larger ones by Solicitors.
Id sit down with your prospective tennent and work through your wants and his needs.
The more you do the more he pays.
All fixtures should remain yours!

Hope this helps

My super Fund Leases my premisis to my Company
Im forever negotiating with myself!!!

Great info, thanks everyone.

Tech, i am the tenant not the landlord so i am trying to workout how it all works as i will need to renogiate the lease early next year.

I am going to need more floor area, more powerpoints, network points, airconditioner(s), walls cut out, walls added, etc.

How early prior to the end of the current lease should you organise a new lease?

I will definitely be getting my lawyer to check everything before signing.

I believe there is a standard form for residential leases. Does anyone know if there is a standard form i can download for a commercial lease or can you just write up whatever you like in an any format you like.

Yeah, residential leases have standard forms e.g. in NSW they are provided by Fair Trading Office for free. I don't think you really have that for office leases; but I just did a quick search on Google and you can purchase some templates.

But since you are already on an existing lease, maybe work from that? I think when you start discussions on a new lease depends on what you want to do; it should be flexible if your landlord is fair.

In my case since I work for the landlord we usually start discussions with tenants as early as 3 years prior to lease end depending on how large the tenants are. All relative.

jersey10 said:

I believe there is a standard form for residential leases. Does anyone know if there is a standard form i can download for a commercial lease or can you just write up whatever you like in an any format you like.

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You havent mentioned whether there is an agent involved?

Usually they or the owner will offer you a lease, based on their documents.

Then you agree changes.

As both a landlord and tenant, I try and put myself in the opposite shoes and treat them as I would want to be treated. No probs so far

a big thing with commercial properties is the potentially long vacancy periods, so if the property has been vacant for a while, the owner will be keen to get a good tenant in.

Remember mate, negotiate.

awg said:

You havent mentioned whether there is an agent involved?

Usually they or the owner will offer you a lease, based on their documents.

Then you agree changes.

As both a landlord and tenant, I try and put myself in the opposite shoes and treat them as I would want to be treated. No probs so far

a big thing with commercial properties is the potentially long vacancy periods, so if the property has been vacant for a while, the owner will be keen to get a good tenant in.

Remember mate, negotiate.

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no agent will be involved, i will be negotiating directly with the landlord who i know reasonably well but not as personal friends or anything. they are a very reasonable landlord and i get on quite well with them.

i do have my eye on purchasing the premise sometime down the track and am wondering how i may include this as part of a new lease negotiation.

jersey10 said:

no agent will be involved, i will be negotiating directly with the landlord who i know reasonably well but not as personal friends or anything. they are a very reasonable landlord and i get on quite well with them.

i do have my eye on purchasing the premise sometime down the track and am wondering how i may include this as part of a new lease negotiation.

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easily, ask to have inserted an option to buy into the contract

Discuss with solicitor.

I did this, and usually would at least discuss it because it keeps them interested and can give you valuable insights into negotiating a sale price later