Renting a commercial property is a huge step, so it comes with several ups and downs. It involves a big financial commitment, and you also have different clauses and regulations to contend with. You must understand the problems associated with renting a commercial property, so you know how to avoid the pitfall. Here are some of the issues that could affect a commercial tenant.
- Length of Lease
Typically, a lease takes up to five years. You should make sure that the space can be assigned to other businesses within this period. It is worth noting that some tenants are not always willing to bear the expenses of building dilapidation liability, especially for short leases. This indicates that the primary tenant could still be liable. The parts of the structure in poor condition are known as dilapidation.
- Room for growth
You should check if the landlord is also willing to rent out the floor when renting a space for your business. It is essential to give room for the expansion of your business. Before renting a property, you should take ensure that there are up-to-date infrastructures that will meet your needs. For instance, does it has the space you need in case of expansion? Are the internet facilities adequate, or would you need to have new ones installed?
- Break Clause
To get out of a lease, you might consider a break clause if the situation warrants that. It entails the payment of more rent at the beginning. A rolling break clause will be of great advantage if anything happens to your business because it allows the tenant to leave the property at any period. However, a tenant must give three months’ notice before exiting the property.
- User Clause
The user clause specifies what a tenant is allowed to do on the property or within the premises. For instance, a restaurant that sells food to customers now makes online sales, causing people to collect food from the shop. This could break the user clause agreement unless allowances had already been made for future alterations.
- Forfeiture
Forfeiture enables the landlord to end the lease if that the tenant goes against any of their agreements. When a tenant defaults on the terms of a lease agreement, the landlord can terminate the lease by forfeiture. It is usually employed by landlords to end a commercial lease. However, it should be noted that forfeiture is not always the best option for the landlord as well as the tenant. A tenant might go ahead to claim a financial loss if the lease was terminated wrongly. Note that tenants can successfully bring a claim for illegal forfeiture of lease.
If you need clarification on some of the problems that a prospective commercial tenant might encounter, or you have any questions relating to your commercial lease, contact Chang Legal today.