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Below are some of the basic aspects of a Commercial Lease agreement for Queensland commercial property which the landlord and tenant should consider.
The lease should clearly specify the commencement date, duration, and any renewal periods.
It should be clearly noted if Goods and Services Tax is payable by the Lessee in addition to the rent.
Where the Lessee is a company, the Lessor will usually require personal guarantees.
The Lease will usually provide that all signage requires the Lessor’s consent. As adequate signage may be a significant component of the success of the Lessee’s enterprise, the issue should be discussed and agreed before the Lease is signed.
The rent for the first year of the term must be clearly stated, as well as how the rent will be calculated after the first year (i.e. fixed percentage increase or CPI).Where the option to renew is exercised, the rent for the first year of the new term will usually be the then market rental and thereafter the rental will be increased annually in the manner specified.
The Lease must specify how Outgoings/operating expenses are recovered by the Landlord. These costs will either be included in the rent or recoverable as an additional amount payable by the Lessee. With an appropriate adjustment when the actual amount of outgoings is known, generally at the end of the year.
The Lease may state if the Tenant is required to undertake a refurbishment of the premises after a specified period of time, and/or upon the termination of the lease at the cost of the tenant.
The address of the premises needs to be clearly described. Whilst an obvious point, time can be wasted clarifying a property’s legal description where a Lease is to be registered and/or where a lender is involved.
The Lease will state if the Lessee must provide the Lessor with a bank guarantee or cash for the bond and the amount of the guarantee.The Lease may also require the Lessee to provide personal guarantees as an additional form of security.
The lease may contain a clause entitling the Lessor to relocate the Lessee to other premises within the Center/Complex.
The Lease will state whether the Lessee is to pay the cost of utilities/services consumed on the premises.
The insurances required by the Lessee will be set out in the terms of the Lease.
Our experienced commercial lawyers can assist landlords and tenants with lease preparation, review, negotiations, renewals, assignments, and dispute prevention. Contact A.L.F. Lawyers today for practical legal guidance tailored to your commercial lease matter.
Whilst the permitted use of the premises by the Lessee will be stated, it is for the Lessee to ensure that the use complies with Council’s requirements. Where there are any doubts whether the use is permissible, the issue should be investigated before any Lease is signed. Where the premises are part of a Centre/Complex with multiple tenancies, a lessee may want an exclusive right to the permitted use within the complex.
Any options to renew the lease for an additional term or terms must be specified. It is vital for a Lessee to have option periods to ensure it has security of tenure when attempting to sell the business conducted on the premises. The lease must clearly state how a decision to renew must be made and conveyed to the Lessor within a defined period of time before the end of the lease. Details of any market reviews and dealing with disputes in respect of market reviews should also be clearly expressed.
