A business owner will often lease their business premises. Signing a lease though is a substantial commitment as the lessee is not only committing to paying rent but could be committing to maintenance and repair, make good obligations, replacement of fixtures or fittings or other substantial and costly obligations.
It is one of the most important decisions a business owner will make. It involves substantial risk and is often a long term commitment. It needs to be approached with care.
Common mistakes that business owners can make with a lease include:
- Failing to consider the incidental costs of the lease – service fees, admin fees, recovery of legal fees etc.
- Failing to identify or allow for outgoings – what are they? How much? Is Land Tax recoverable?
- Failing to identify when rent can be reviewed and how it will be reviewed.
- Not understanding the repair and maintenance obligation – who has what obligations? Who has the obligation to replace the air conditioners when they break down and cannot be repaired?
- Not asking for exclusivity in the Centre. Not all lessors will agree to give the lessee exclusive use but if you are starting out in business, you don’t want competitors opening up next door to you if possible.
- Not checking if the proposed use is a lawful use of those premises. The lessee should contact the local council and make sure it is before they sign the lease.
- Not getting legal advice before the lease is signed. A good leasing lawyer should be able to tell the lessee if the lease in question is reasonable for a lease of the kind that is being entered into.
We can provide advice on leasing issues. Call Donnie Harris Harris Law on 47 24 1016 to discuss your leasing issue with a Townsville Lawyer.
