When leasing a property it is always advantageous to approach the issue in a structured way. There are different items that you need to consider, depending on whether or not it is a commercial property. The initial terms in most leases of commercial properties range from three to five years.
It is important you ensure that you are dealing with the right person who has the authority to make the lease.
If it is a sublease, it might be prudent to request for a copy of the initial lease to be sure that the person leasing has the right to do so and you are not paying for more than the term remaining on the lease.
While this might seem basic, many have been burnt by failing to consider this in the light of the general rule that a person cannot give what he or she does not have the authority to give.
Once you have the assurance that you are dealing with the right person, you can proceed to schedule an inspection of the property. Real estate agents and valuers manage many commercial properties, which makes it more assuring to engage them as professionals who have a brand name to protect. During your preliminary inspection, you should take note of critical issues such as parking, water, garbage collection, general security of the building, among others.
While carrying out the inspection, make sure that you ask about the person responsible for the repairs of damaged parts of the property. Most property leases are done on a “as it is” basis, but if you specifically point out property damages and other concerns, you are likely to receive the assurances of the landlord to repair such damages. This is also a good time for you to confirm if you could alter the property to your taste and the process for securing the property owner’s approval. Depending on the nature of the repairs, you might be able to get a rent discount for a certain period.
During your period of inspecting the property, do take out time to look beyond the building into its environment. Ask the agent or owner for details on the general attitude of the neighbours and the neighbourhood. Is it a neat and decent environment that will attract quality people to your business? The garbage collection practices of that area should be looked upon. Are there smell or noise challenges? Does the building have adequate parking onsite and around it? Are you comfortable with the nature of businesses in the area? Sources of unusual noise or smell should be discreetly investigated.
In some instances, some properties cannot be altered without government approval. You must be very careful in assuming that because a property is in an area that is turning commercial that all the properties there were approved for commercial usage. If the property is zoned for residential purposes, it might pose a problem if you intend to change the use to commercial. In most places, the change of use process is time consuming and costly. This could lead to cost overruns and delays in construction timeline.
In addition to the above issues, you should read the lease carefully or better still, get a legal practitioner to read the lease agreement. There are a couple of tripping points in some lease agreements that an observant reader should be cautious. Be sure that the commencement date reflects the period that you are in possession of the property, and not the period when the owner is still carrying out renovations and repairs. If your lease commences before you gain full access or use of the property, you are losing money because you have paid for an unused term.
It is noteworthy that the right to sublet is not automatic. It should be clearly spelt out in the agreement. After the expiration of the initial term, there should be an option for you to renew the agreement and it is possible to lock in a fixed rental increase. If the option to renew is absent and the other party refuses to incorporate it, this might be a huge risk that you are taking by proceeding to renovate and refurbish the property. Furthermore, an arbitration clause should be included to enable the parties, in case of any dispute that might arise, to resolve as soon as possible.
Source: Abiodun DohertyFollow Us on Social Media