When it comes to leasing commercial property there are many considerations that should be thought through clearly in order to protect both parties. For the property owner a tenant might begin to act in a way that could hurt the owner’s financial interests and for the tenant, they need to know what are their rights and obligations. Everything from an acceleration clause to allocating risk for injuries that may occur are clauses that can be added to protect everyone involved so that there are no questions later. Remember that at the beginning of any relationship, whether personal or professional, everyone is happy and very agreeable; however, when things begin to go wrong even the nicest person can become horrible. So protect yourself. Here are some guidelines on commercial property lease.
As mentioned above an acceleration clause is placed within a leasing agreement that will allow the owner to accelerate the collection of monies in the event a tenant begins to default on the agreement. {This is a link to NZ legislation about acceleration clauses). Without this clause if a tenant goes into default a landlord will have to wait each month for the rental payment to be made. By adding an acceleration clause it will require the tenant to become liable for the full amount of lease which in most cases could be thousands of dollars. So as an example, if the lease is for five years and the tenant defaults after eighteen months they will become liable for the remainder of months left on the original lease. Each state will have some different views on how this can be enforced but it is an important clause to add to any commercial lease agreement.
As mentioned above an acceleration clause is placed within a leasing agreement that will allow the owner to accelerate the collection of monies in the event a tenant begins to default on the agreement. {This is a link to NZ legislation about acceleration clauses). Without this clause if a tenant goes into default a landlord will have to wait each month for the rental payment to be made. By adding an acceleration clause it will require the tenant to become liable for the full amount of lease which in most cases could be thousands of dollars. So as an example, if the lease is for five years and the tenant defaults after eighteen months they will become liable for the remainder of months left on the original lease. Each state will have some different views on how this can be enforced but it is an important clause to add to any commercial lease agreement.
Another very important clause is to make sure it is very clear on who is responsible for injuries in the event an accident of any kind happens on the property. This becomes especially cloudy when there are any common areas on the property. When something happens everyone is trying to blame the other party for the cause. In some cases, the landlord of property owner can be liable for injuries if the injury is caused by defects in the building itself. On the other hand if the tenant made changes to the building that the landlord was not aware of it could change who is liable. The bottom line is that both the landlord and tenant need to carry liability insurance to make sure they are protected. Make sure this is part of any lease you create.
Another consideration that should be answered prior to entering a commercial property lease is who is responsible for what when it comes to repairs to the property. If the roof leaks and causes a business to close as a result it is important to know up front if the landlord has a requirement to act swiftly or not. In other words how quickly do they have to respond before they can become responsible for any losses you incur? What if the roof leak was a result of a natural disaster? As you can see it is critical that you consider everything before you enter into a commercial lease agreement so that all parties are protected.
What about when the lease comes to an end. Is the tenant responsible for returning the property back to its original condition no matter how long the lease was for? Everything from the paint color to the flooring can become an issue. On the other hand many commercial leases allow for modifications to be covered by the landlord as an incentive to lease the property. Much of this will depend on the size and length of the lease. The larger the lease the more incentives a landlord may offer. But, what if the tenant defaults early in the lease? This is why it is so very important to make sure you add the answers to these types of questions in the lease agreement.
Both sides to a commercial lease need to seek legal advice. Look for a lawyer for advice on commercial leases. This law firm, McVeagh Fleming & Co is a lawyer for leases on the North Shore in Auckland.
So no matter what type of property is being leased it is important consider all possible things before entering into a leasing agreement. This could eliminate a ton of headaches in your future. Good luck!
http://mcveaghfleming.co.nz
Another consideration that should be answered prior to entering a commercial property lease is who is responsible for what when it comes to repairs to the property. If the roof leaks and causes a business to close as a result it is important to know up front if the landlord has a requirement to act swiftly or not. In other words how quickly do they have to respond before they can become responsible for any losses you incur? What if the roof leak was a result of a natural disaster? As you can see it is critical that you consider everything before you enter into a commercial lease agreement so that all parties are protected.
What about when the lease comes to an end. Is the tenant responsible for returning the property back to its original condition no matter how long the lease was for? Everything from the paint color to the flooring can become an issue. On the other hand many commercial leases allow for modifications to be covered by the landlord as an incentive to lease the property. Much of this will depend on the size and length of the lease. The larger the lease the more incentives a landlord may offer. But, what if the tenant defaults early in the lease? This is why it is so very important to make sure you add the answers to these types of questions in the lease agreement.
Both sides to a commercial lease need to seek legal advice. Look for a lawyer for advice on commercial leases. This law firm, McVeagh Fleming & Co is a lawyer for leases on the North Shore in Auckland.
So no matter what type of property is being leased it is important consider all possible things before entering into a leasing agreement. This could eliminate a ton of headaches in your future. Good luck!
http://mcveaghfleming.co.nz