Our Leasing Series – Part 2

By August 7, 2018Business Law

Part 1 of 2-part series on leasing for small business premises

Leasing: Success, Security and Saleability for your Small Business

What Do I Have to Fix?  

Generally, repairs and maintenance are your responsibility however any work of a structural nature should be the Landlord’s responsibility.

This is a common area of dispute, so the lease needs to clearly identify the maintenance obligations of each party, particularly in relation to significant items of fixed plant such as air-conditioners.

It’s important to review your lease to identify whether you have to “make good” at the end of your lease. That means returning the premises to the condition it was at the beginning of the lease by removing your fit out, replacing partitions etc removed, repainting or replacing floor coverings.

Can I Make Any Changes to the Premises?

Your lease should outline whether you can make changes to the Premises and who owns any improvements. Generally, the landlord will need to approve any changes you make first, especially if the changes are of a substantial nature. If you need to carry out a refit, it is important that the lease allow for this or you have the consent of the Landlord before signing the lease.

If signage is vital to your business, you should make sure the lease allows the type of signage you require.

What if I Sell My Premises

A lot of work goes into building a successful small business. A secure lease will allow you to maximise the saleability of your small business.

A business with a secure long term lease, will be more attractive to a potential purchaser. You must therefore ensure your lease allows an assignment of the lease to another party.

When you assign your lease, you transfer your rights and obligations under the lease to a third party. Your lease will set out the requirements that need to be met to assign your lease such as Landlord’s Consent and who pays the costs of assignment. Make sure the conditions on the assignment of the lease are not too onerous on you or an incoming tenant.

How Else can My Lease End?

The circumstances under which a lease can end should be set out clearly in the lease and could include:

  1. the lease term has expired;
  2. the Landlord has chosen to exercise her right to demolish or develop the premises;
  3. the Landlord and you negotiate to end the lease early;
  4. You elect not to exercise an option to renew the lease; and
  5. either the Landlord or you have materially breached the leased.

What happens if you disagree with your Landlord?

The lease will be the first document to refer to in resolving any disputes between you and your Landlord; it is vital that the lease clearly sets out the parties’ rights and obligations.  The lease may contain a dispute resolution clause which must be followed.

In our experience, it is better to get advice early in a dispute so you know your full range of alternatives and risks.

If you or anyone you know could benefit from our experience in leasing for small business, please be in contact with us.

Click here to review Part 1 of the series

Check out our video on “Our Quick Guide to Leasing”