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Insight

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Writer's pictureAmy Reed

Lessee’s Leasing checklist

Entering a lease, whether its retail or commercial, should always be taken seriously. Generally, leases are for extended periods of time and have limited termination rights. Lessees need to be aware of the scope of their obligations right from the beginning.


In a standard lease negotiation, each party will liaise with the managing agent to hash out the key terms. The parties often do not seek legal advice at this stage. Although we recommend that legal advice is sought throughout the heads of agreement negotiation, if this is not possible, it is important to ask yourself the following questions:

  1. What is the maximum extent I am willing to be liable for this lease? For leases with long periods, it is important to try and cap your liability.

  2. If I enter the lease with a corporate entity, will I still be personally liable? Generally, a lessor will require a personal guarantee from a lessee entity, so you must ensure you have adequate advice about asset protection. Also, the limitation in point 1 is relevant for this too.

  3. Is the land I am leasing clearly defined? You should be certain that all of the land (including storage areas and courtyards) will be included in the lease if this is your expectation.

  4. Will the lease include carparks? This is a big issue for tenants. Often it is assumed, but it is recommended that any car space promised by the lessor is included in the leased area. Further to this, please consider if the carpark use should be exclusive.

  5. What are the outgoings? Again, it is worthwhile trying to limit the outgoings payable when negotiating a lease. You should make sure the list is exhaustive (not open ended).

There are many other matters of which you should consider. Ideally, you will seek legal advice to ensure that you negotiate the best position.


If you have any questions, please contact our office.

 





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