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BMC Law on What Tenants Should Know Before Signing Commercial Lease

Wednesday 27 November 2019, 1:58PM

By Beckie Wright

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Wellington-based legal experts, BMC Law, have released free advice on what tenants should be on the lookout for when shopping around for commercial real estate. Before signing a commercial lease, there are a handful of key concerns tenants should take into account.

The first of these is assignment. It’s important before you sign a lease to ensure that your liabilities as tenant cease when you vacate, as this may not always be the case.

Keeping an eye on any rent increases that are included in the lease is important too. For example, when using some commercial lease forms, it is outlined that every rent review can never result in a rent that is lower than the ren paid for the twelve months prior to the rent review. This can—in some cases—lead to tenants paying above market value after a rent review.

There is also a clause in some commercial lease forms that can require tenants to be liable for any fees levied by the landlord’s solicitors. With expert help, tenants are often able to negotiate or fix this fee.

The terms of the lease may not be ideal for you, and it could be in your favour to renegotiate these too. For example, new small business owners may not want to sign a less with a multiple-year term, as they are unsure if their business will succeed for its first year. Even if a real estate agent tells you that a three-year term is standard, having legal help on your side opens up a number of opportunities for negotiation. After all, many real-estate agents may be amenable to the idea of changing a three-year term with a right to renewal for a further three years into a deal that’s better for new small business owners, such as a one-year term with a right to renewal for a further five years.

Ultimately, there is a lot to know before leaping into a commercial lease. Having a lawyer available to examine the paperwork is the best asset you can have throughout the process.

To find out more on commercial law services you can visit the BMC website here: https://www.bmc-law.co.nz/