Generally, most of what you are required to do at the end of a commercial lease will be within the lease itself – perhaps just leaving the property empty, clean, tidy and in original condition without any damage.
Sometimes landlords will try to be sneaky and basically require you to leave the property in BETTER condition than you found it. So remember if it’s in the lease and you agreed to it, then you must comply with it – no matter how unfair it seems. Hence, the importance of negotiating a good lease and making sure you read all the clauses before you sign it.
The lease may also specify that you:
- Must remove all fixtures and fittings
- Repair any damage caused
- Re-paint and/or re-carpet the property
What if I want to continue the lease?
Of course you are not obliged to stay on at the end of the lease. Though if you do want to stay you do have a few options up your sleeve – all of them depend of negotiating a good deal with your landlord.
- Remain on the premises on a month-to-month lease (only with the landlord’s permission of course)
- Negotiate an entirely new lease with the landlord
- Check to see if there is an option to renew the lease (which gives you the right to continue to occupy the premises for a pre-determined period of time and for a nominated rent, but otherwise on the same terms and conditions as the original lease) and if there is then what you have to do to exercise the option
If there is no option or you do not exercise it, while in some states legislation requires the landlord to give priority to current tenants over new tenants at the end of the lease, in most states continuing the relationship rests on your ability to negotiate with the landlord.
Options to renew
These clauses will normally have deadlines, and procedures which you are required to comply with, in order to exercise the option.
In order to exercise an option you will need to make sure you are not in default or otherwise in breach of any of the terms of the lease. Depending on the terms of the lease you may also need to ensure that you have not breached the lease at any time during the original commercial lease.
Ending the lease for alleged breach
Most leases contain clauses which give the landlord the power to end the lease early if the tenant breaches its terms. However, in most states a landlord must provide written notice to the tenant of the breach and give the tenant reasonable time to rectify the breach.
If a landlord terminates a lease for a tenant’s breach the landlord might be entitled to damages, plus compensation for loss of future rents under the lease, so care must be taken to minimise the risk of this occurring.
Premiums are not allowed
Landlords are not allowed to charge a fee for the renewal of a lease.
A landlord may also bring a lease to an end early if the premises require significant reconstruction, repair or renovation and this cannot be done if there is still a tenant occupying it.
However, this cannot be done if:
- The landlord fails to provide the tenant with adequate information about why the property needs to be demolished, this rule really exists to ensure you have been given enough evidence to show the demolition is genuine.
- The landlord has not given you at least six months’ notice.
Most importantly, whether you are a landlord or tenant, familiarise yourself with the terms of the lease so that you are aware of your rights or seek advice from a LegalVision lawyer.