This webinar was delivered on 14 August 2014.
In this webinar, we consider 10 top legal issues that tenants need to consider before signing a Retail Shop Lease or a Commercial Lease, or even a Letter of Offer or a Letter of Intent. (A Letter of Offer or Letter of Intent can form a binding Agreement to Lease. We will show you how to avoid this.)
1. Letter of Offer or Letter of Intent:
a) Could constitute a binding Agreement to Lease
b) How to avoid that consequence
2. Permitted use: make sure Lease allows everything tenant may want to do, especially if it involves an activity that is outside the norm, or may cause nuisance, pollution or require a licence/permission.
3. Rent and Outgoings:
a) Gross or + outgoings, turnover rent
b) Rent reviews – fairness of mechanism/amount of % increase (holding over)
c) What is included (outgoings)?
d) Proportionality or mechanism for calculation – take care about increased proportion if other tenants move out
4. Landlord’s works, moving in and Fit-out:
a) Accurately describe what is expected of Landlord, by when and at whose cost (usually Landlord)
b) Obligation to pay rent not to commence until Landlord works complete and you have moved in
c) Opportunity for tenant to access premises sufficiently ahead of lease commencement to complete fit-out
d) Freedoms re extent and nature of fit-out
5. Default, termination and re-entry
a) Must be reasonable notice of breach and opportunity to remedy, even for late rent: Property Law Act s124 (Qld)
b) Breach of essential term clauses often need amendment
6. Assignment and release:
a) Original Tenant and guarantors remain on hook?
b) Indemnity by assignee
c) Release (what is the issue here?)
7. Change of control provisions:
a) Test for change of control
b) Deemed assignment or just consent?
c) Extent of Landlord’s requirements
8. Re-development and demolition / relocation:
a) Don’t accept it if there’s no suitable re-location – can ruin your good will
b) If the landlord really wants it, the landlord should buy your business
9. Shopping centres/Retail leases:
a) Exclusivity – make sure it’s drafted to be as inclusive as is reasonable (in tenant’s favour)
b) Core trading hours – check Act and expectations (can be onerous)
c) Marketing – how do you measure/assess?
d) Centre management – what are they like?
10. Maintenance and cleaning
a) Building structure and air-conditioning capital expenses are Landlord’s responsibility
b) Glass and air-con routine maintenance are for Lessee
c) Common areas – who cleans?
Once you listen to this webinar, you may be interested in our High Point Lease Advice Services.
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