What is a Commercial Lease?
A business property lease or commercial lease is a legally binding contract between a business owner and the owner of the property to permit the tenant an exclusive right to use the premises for a given purpose. As a contract the terms are fully negotiable before completion.
These documents are generally more complicated than residential leases, because the lease is usually heavily customised to the individual situation. The lease terms and conditions need to be very carefully read to ensure that they match the needs of your business, as any mistakes at the beginning could break a new business.
Can I negotiate the terms?
Yes, lease terms are often negotiable. The specific terms or restrictions which may be up for negotiation include the rent amount, rent increases, the duration of the lease, the modifications you can make to the property and whether you can transfer or assign the lease. A tenant should also seek a survey and bear in mind dilapidations before making an offer on a property.
What else should I look for?
This is hard to answer without knowing your specific situation and your business requirements. Some of the common things we find we need to discuss with clients include:
- If you’re a new business, check that the length of the lease suits you, as many landlords prefer to lock in a longer lease
- There are several ways to calculate rental increases so make sure you understand and agree to the one chosen by your lessor
- Read the section on property improvements very carefully as it should set out who can make changes, who pays for the modifications and whether you have to return the property to its original condition at the end of the lease
- Make sure the lease includes all of the areas you expect to use including bathrooms, parking areas and common areas
- Are you able to actually use the property for the purpose you require it for? This is both under planning and also the lease terms.
- Be careful that the lease doesn’t stop you from erecting signs in certain areas
- A Tenant should also seek a survey and bear in mind dilapidations before making an offer on a property.
Please seek legal advice before you make any commitments, including signing an offer, paying a deposit or moving anything you own into the property.
What if I am in a dispute with my Landlord or Tenant?
First, find your lease documents and read them carefully, making sure that you completely understand the legal terms and conditions.
Secondly, make sure you understand your legal rights and responsibilities and those of the other party. We can help you better understand your rights in simple, plain English.
Lastly, consider the options, which include negotiation, mediation, and possibly court action.
At SO Legal our team of commercial property and commercial litigation solicitors across East Sussex in Eastbourne, Brighton, or Uckfield can help make sure your commercial lease is in order before you make a commitment which could be costly to break. Contact us to make an appointment with one of our lawyers.
Read our Guide to Negotiating Heads of Terms: