Starting a Business: Entering into a Commercial Lease:

When starting a new business, or expanding your current business, one of the first things you will do is seek out an office or retail space to set up shop in. This will usually entail entering into a commercial lease for the premises. However there are a lot of considerations to be made before signing on that dotted line. 

In most cases there will be some negotiation between yourself and the Lessor (or Commercial Leasing Agent). This could be a mix of both oral and written negotiation, including a string of emails. It’s important to ensure that everything that you agree to with the Lessor during this negotiation is included in the Agreement to Lease that you receive following the negotiation period.

An Agreement to Lease is a document separate to the Lease. It is not a generic document, but tailored to each premises and parties. This is why it is important that you ensure all of your requirements for the Lease are explicitly contained within it.

Once receiving this and the subsequent Lease document it is important that you review these in detail to ensure that nothing is containing within that shouldn’t be there. An Agreement to Lease and Lease document will contain many pages of specific clauses covering everything from opening hours, to insurance requirements and termination. You should read each and every clause contained within to make sure they belong there. Any clause why doesn’t apply to you, or was not agreed to should be removed. For example a common clause within a retail lease is a demolition or relocation clause. Think carefully about the impact having to move your retail business would have on you financially if your Lessor decided to act on this clause. Reading each clause will ensure there are no nasty surprises awaiting you further down the track. 

One of the most vital sections of a Lease you must ensure meets your needs is the term of the Lease and the options for renewal. Make sure the term is suitable to the needs of your business and there is an option to renew.

Our Gold Coast and Brisbane lawyers have a passion for business and commercial law and can assist you with entering into a commercial lease.

Finally and most importantly you should make yourself aware of your rights regarding the termination of the Lease and what the consequences are for doing this. Terminating a Lease can have serious legal consequences and its important you are aware of what these are in case your business does fail, or the premises end up ultimately being unsuitable to your needs. 

Many business owners are not aware of the rights for negotiation when entering into a Commercial Lease. There is little point to signing a generic Lease document as it is probably not suited to your needs and may be more favourable to the Lessor.

If you are considering entering into a Commercial or Retail Lease, contact Dylan & Inns Gold Coast and Brisbane on 1300 36 32 10, or email hello@dylaninns.com.au.