Commercial lease is a legally bound contract between a landlord and a tenant. The landlord could be also the freeholder (some landlords are subletting leaseholders), whilst the tenant will be the leaseholder, and in relation to commercial lease, the tenant is also a business owner. Commercial lease should not be confused with residential lease.
So you have a commercial lease but you haven’t signed it yet. How legally bound are you then? Have you got any obligations and responsibilities? If the lease comes to an end and the tenant is allowed to occupy the property, should there be a formal renewal of the contract, or would running over suffice?
Before signing a commercial lease, have before you a check list:
If you haven’t ticked these 4 essential tasks before signing a commercial lease, don’t sign it at all. Clauses in a commercial lease have significant implications for both tenant and landlord. Commercial leases without formalities are a high risk. A tenant could have statutory rights even if the lease hasn’t been signed. The landlord could get a court order to evict the tenant but compensation might be sought, including the right to remain in the property, as well as the right to renew the lease, with or without the landlord’s willingness to do so.
Whether you’re a tenant or a landlord, contact a property solicitor who will help with the check list above and identify any issues relating to a commercial lease. You need to spend time reading the lease and then have a solicitor who will review the lease terms, breakdown the clauses and terminology into simplified English, so that you are fully aware of the benefits and implications of any of the clauses set out in the lease.
Read the contract and highlight anything you don’t understand or anything you’re unsure about. Your property solicitor will help you understand what’s in the contract and will also suggest any amendments. New clauses may be added to a commercial lease, including an agreement that the landlord will not raise the rent after a year. SG
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