As Forrest Gump infamously said, “Life is like a box of chocolates, you never know what you are going to get”.
Leases are a lot like a box of chocolates; you never know what you are going to get.
Some leases are comprehensively drafted and others, are well, not. Some leases may appear well drafted, but when you bite into them, their center is off-putting.
Whether you are a landlord or a tenant, it is important to ensure that your commercial or retail lease protects you.
This article looks at different types of leases, and matters to look out for when considering entering into or granting a lease.
The $2 Shop Chocolate Lease
We have all received cheap chocolate in Christmas stockings. It is shiny and looks great. You can’t wait to bite into it. But it leaves a bad taste in your mouth and gives you a headache – a type of “chocolate hangover”.
Poorly drafted leases are no different.
A Landlord or Tenant may think they are getting a lease, and it is the piece of paper alone that matters. However, an experienced leasing lawyer should draft the piece of paper to cover all bases. It is critical that the lease has substance and legal effect, as well as a shiny appearance.
Cadbury Chocolate – the People Pleaser Lease
Next, we move on to the Cadbury chocolate equivalent in the leasing world. It does the job of satisfying your chocolate craving, and most people like it.
Similarly, a Cadbury lease will do the job for many people. It is mostly suitable for less complicated matters. For example, the various state Law Society or Real Estate Institute leases tick this box. They are on the whole, well drafted, and are fair and balanced for both parties.
These types of leases address the majority of central issues, but do not go further to cover more unusual leasing provisions. These can include fitting out premises or lease contributions from a landlord to a tenant.
Continue reading this article below the formHandmade Belgian Chocolate – the Bespoke Lease
Finally, there is the handmade Belgian Chocolate that melts in your mouth. A little goes a long way, and it makes you feel all warm, happy and content inside.
A tailored lease is just like this.
Put together to carefully and specifically address you and your business’ needs, these leases protect tenants and/or landlords as well as address any complex issues.
A custom lease considers many scenarios that can arise so as to ensure that the Lease covers the parties, despite what eventuates during the Tenancy. This is important to consider when some tenancies are 5 or 10 years in length, inclusive of option periods.
For these reasons:
If you are a landlord, consider looking at obtaining a bespoke lease to protect your interests.
If you are a tenant, consider having a lawyer reviewing your lease and suggest amendments to confirm the provisions benefit and protect your interests.
In drafting or reviewing a lease, it should be noted:
- A lease determines the relationship between the Landlord and the Tenant;
- All items agreed between the parties must be noted in the lease;
- At a minimum the following items should be covered:
- Rental
- Permitted Use
- Fitout of Premises
- Handover dates
- Lease Incentive Payments
- Costs payable by all parties – noting that if the Lease is a Retail Lease, the Retail Lease Tenancy Legislation for your specific state will regulate the costs to some extent; and
- Any other matters, such as whether there is likely to be a demolition of the premises during the lease.
Key Takeaways
Don’t leave it to chance – make sure you’re not like Forrest Gump and you know what sort of box of chocolates you will be getting (preferably Lindt).
Landlords, have one of our leasing lawyers draft your lease today.
Tenants, don’t enter into a lease without having one of our experienced leasing lawyers review it.
Questions? Please get in touch on 1300 544 755.
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