Understanding Australian Law

If you plan to lease property, the owner or manager will present you with a commercial lease agreement. Unfortunately, most people do not know how to handle this document. Below is a piece discussing the benefits of commercial leases and how to negotiate the contracts. 

What Are The Benefits Of Commercial Leases?  

The commercial lease agreement details the relationship between the lessor and the lessee. Typically, a lease allows a lessee to occupy the lessor's property for a specified period. During this period, the lessor has significant property rights, although they do not own the property. However, conflicts could arise between the two parties before the expiration of the lease. The commercial lease contract aims to prevent such disputes.

For instance, the agreement stipulates the lessee's rights. For example, what renovations or improvements can they conduct on the property? Who maintains shared amenities such as staircases, parking lot, washrooms, and recreational facilities? Ideally, both parties should negotiate the lease conditions to ensure it protects their interests. 

How Do You Negotiate A Commercial Lease? 

Suppose you are a lessee; how would you negotiate a commercial lease agreement? In most cases, the contract would be challenging to comprehend since it contains some legal jargon. The best approach would be to hire a commercial lawyer to assess the agreement, establish your needs, and negotiate the conditions. The lawyer's first task is to verify property ownership.

For instance, if the property is used as collateral for a construction loan or mortgage, what assurances do they give to protect your business if they default on the loan? The lawyer also examines the building insurance. Ideally, the property owner must insure the structure against natural disasters. Nevertheless, the lessee should insure their business against the varying risks. 

Then, the lawyer establishes your obligations. For instance, in most cases, the commercial lease requires lessees to manage the shared property. However, if the property contains other lessees, how does the property owner determine how much each lessee should contribute? Ideally, the contributions should be based on the square footage that each business occupies.

Your lawyer also evaluates the amount of access you have to the various amenities on the property. How instance, how many parking lots can your business occupy? Are you allowed to the rooftop? These are essential concerns that could affect your business operations. 

Your lawyer also negotiates for a non-competing clause. Simply put, a competing business should not be allowed to occupy space on the premises. Finally, they explain the conditions of amending the contract and the penalties for breaching its conditions.