Almost any kind of business started today needs a premise to operate from. Workshops, storage facilities, factories, and even offices will need a physical address to operate from. While some of them own the place they put up, many occupy their physical address under lease and pay some fees to keep them there. There’s more to commercial leases than the payment of rent and this extra information is what this article is all about. These are 5 need to know facts to protect yourself as a commercial property tenant.
1. Will you be forced to exit your premise if your business fails or suffers a shutdown?
The simple answer to this is no. Leases are granted to tenants for a fixed period of time. This duration is often referred to as a term. Unless your term expires, you are entitled to using that premise for anything you need to do.
It is also equally important to note that you are the only one who can end the agreement if your landlord agrees to release you from your lease before time elapses. or, before entering the agreement your landlord has agreed that you have no option to do so. If neither of these situations arises and an acceptable replacement tenant cannot be found, you remain bound to occupy the premise, pay rent and comply with other therein, even if you don’t physically occupy it.
2. The lease binds you to pay rent for the premise that you occupy, but are there any other costs that come with it?
Yes, there are plenty of things apart from the rent that might need to be paid for when you rent commercial property. You may occupy an office space that’s part of a large block owned by your landlord. This means that you will have to share some of the common areas of the block you are in with other tenants. By doing so, you definitely have to pay extra as a contribution to the maintenance and upkeep of the common areas of the building. This extra cost incurred is referred to as the service charge. You will also be responsible for paying insurance premiums for the premise. This charge covers the rent that may be lost if the premise is damaged and deemed unusable.
Lease transference or sub-letting to other tenants will also cost you some extra money since you will need your landlord’s written consent. The landlord normally claims the consent of drafting and agreeing to your permission, and you will be responsible for the utilities, business rates and many other outgoings related to the premise.
3. Will your landlord sort out the repairs you find on the business premises?
It is important to keep in mind that repairs are your landlord’s responsibility especially when you are moving into the building. If you already occupy the building, then you should also make sure its integrity is maintained and by doing so you limit your repairing responsibility. New or incoming tenants should thoroughly check and record the building’s condition before they occupy the building.
4. What happens in circumstances when you discover problems on the premise that affect your business?
When a tenant finds a problem that directly affects their business, they are allowed to have a comeback to their landlord. But in order to do this, it is advisable that they involve a solicitor like a lawyer to do thorough research on the building, and this should happen before the tenant rents out the place.
Common issues that solicitors should look into include whether the landlord has the power to enter into an agreement with the tenant, the rights that may affect the building and those that may benefit the same property like right of way, a thorough research should also be done to find out the building’s planning permissions, the risks it might run in case its built on contaminated land, whether it is connected to public highways, if it is affected by historic mines nearby or if it is connected mains utilities. Before taking a lease, there are so many things you should look out for, and these things are better done by a lawyer since they are likely to protect you in case you run into trouble.
5. Does the landlord have a right to change your locks when you delay paying rent?
Yes, he or she does. As a matter of fact, if you don’t pay your rent at all, the landlord has the right to terminate the lease agreement you are in. This, of course, has to be outlined in a clause in your commercial lease. In many commercial lease agreements, landlords can terminate the contract if you delay paying your rent within 14-28 days. They also don’t need the blessing of the court to do such an undertaking.
These are some of the basic concepts any tenant needs to know when they find a property and before entering into an agreement with any landlord. The best advice to any tenant is that they should know what they are up against before walking into a legally binding agreement. You should also clearly know your rights in case there’s foul play in your agreement.